As International Fraud Awareness Week (November 17–23) unfolds, the U.S. Internal Revenue Service (IRS) is highlighting the critical role taxpayers, businesses, and professionals play in combating tax fraud. With tax scams on the rise, the IRS Office of Fraud Enforcement and IRS Criminal Investigation are amplifying efforts to educate the public on recognizing and reporting fraudulent schemes.
Here's what cybersecurity and financial professionals need to know about detecting, reporting, and preventing tax fraud.
Tax fraud schemes can target individuals and businesses or stem from improper actions by taxpayers themselves. Common examples include:
- False exemptions and deductions
- Filing multiple tax returns
- Misreporting income or failing to file returns
- Kickbacks, organized crime, and public corruption
- Scams exploiting Employee Retention Credits, Fuel Tax Credits, or fake charities
To guard against these threats:
- Learn to identify phishing and smishing scams, which are frequently on the IRS's "Dirty Dozen" list of scams.
- Be wary of unscrupulous tax preparers or promoters offering unrealistic refunds or benefits.
The IRS encourages individuals to report suspected tax fraud or abusive schemes using the following forms:
Form 3949-A: Report violations like unreported income, false deductions, or tax evasion by individuals or businesses. Submissions remain confidential.
Form 13909: Used to report tax-exempt organizations suspected of violating tax laws. This includes employee plans, tribal governments, and other entities.
Form 14242: Report abusive tax schemes or misconduct by tax promoters or preparers.
Completed forms should be sent to the IRS Lead Development Center here:
Internal Revenue Service
Lead Development Center MS7900
1973 N. Rulon White Blvd
Ogden, UT 84404
Fax: 877-477-9135
For individuals with credible and specific information about fraudulent activity, the IRS offers potential monetary awards to whistleblowers. Use Form 211, "Application for Award of Original Information," to apply. These tips may lead to criminal investigations, penalties, or injunctions against fraudulent actors.
The IRS Office of Fraud Enforcement works to:
- Strengthen fraud detection and response
- Identify high-risk areas for non-compliance
- Refer cases to criminal investigations when appropriate
The IRS's Security Summit, a collaboration between the IRS, state tax agencies, and private-sector tax industry players, also works to bolster taxpayer defenses against identity theft and scams.
Some key takeaways for organizations and taxpayers:
- Stay Vigilant: Learn to recognize scams and protect your personal and financial data.
- Report Fraud: Use the appropriate IRS forms to report suspected violations.
- Educate Yourself: Familiarize yourself with resources like the Dirty Dozen list of scams to stay informed.
By staying informed and proactive, taxpayers can contribute to creating a safer, fraud-free financial environment during International Fraud Awareness Week and beyond.
