IRS warns small business owners about new pandemic-related scam that’s netted $1B
HONOLULU (HawaiiNewsNow) - The Internal Revenue Service is sounding the alarms about another pandemic-related scam ― and this one targets small business owners.
Bret Kressin, special agent in charge of the Seattle office with IRS Criminal Investigations, said it’s the newest way thieves are stealing money from hard-working taxpayers.
Kressin said the scam involves people pretending to be tax accountants.
The so-called ‘ghost’ tax preparers are advising small businessowners to file amended tax returns for 2020, 2021 and 2022 and to claim the employee retention credit.
That credit was for employers who continued to pay workers during COVID-19 shutdowns.
The employers could claim up to 70% of the wages in a credit.
“Scammers out there are trying to take advantage of that claiming to individuals that they’re entitled to this credit,” he said, adding that instead the thieves take the return or a portion of it.
Amended tax returns can be filed up to four years later.
Kressin said the Criminal Investigations Office has multiple active investigations into suspected fraudsters who helped people file amended returns.
Nationwide, the IRS reports, 106 cases have been launched. Some of those are in Hawaii.
Losses are nearly $1.2 billion of potentially fraudulent credits.
While this particular scam is taking hold now, ghost preparers have been a problem for awhile.
“There’s a number of ways you know that they can lure you in, they could send emails, phishing scams,” said Larry Black, of the AARP Hawaii Fraud Squad.
Black said these are some of the warning signs that your tax preparer may be a fraud:
- Refuses to sign the return
- Refuses to enter a Preparer Tax Identification Number, which is required by the IRS
- Charges a percentage of your refund
- Asks you to sign a blank or incomplete tax form
- Files the return without allowing you to review it
Black added you should be wary if your preparer demands payment in cash or cryptocurrency.
There are several other scams the AARP is also warning about,
If you suspect that you are a victim of fraud, notify the IRS right away.
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