Investment Scams Are Becoming More Sophisticated
Transcript of Podcast Episode 285
Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, investment scams are becoming more sophisticated, and the IRS has some suggestions.
The IRS has once again published its “Dirty Dozen” tax scams. These are a variety of common tricks that taxpayers may encounter at any time. They urge you to be vigilant and not fall prey to any of these.
Among the scams highlighted for this year are:[1]
- Bogus tax avoidance strategies. These are a rehash of things the IRS has brought up in previous years: So-called “syndicated conservation easements” that generate a phony charitable tax deduction, and “micro-captive insurance arrangements,” where operators try to get excessive deductions.
- Schemes with an international element. This is where a promoter will lure someone with offshore accounts by claiming they are out of the reach of the IRS.
- Tax schemes geared toward high income filers. These include improper art donation deductions, improperly using a charitable remainder trust to avoid paying a capital gain, and illegally delaying the income taxation of an installment sale of assets.
- “Spear phishing” attacks. This is a common scam where criminals impersonate real people to gain access to their sensitive information.
- Taking tax advice on social media. The IRS warns us about bad tax information on social media that can lure honest taxpayers with bad advice, and potentially lead to identity theft.
- Untrustworthy tax preparers. This one has been out there for a few years. So called “ghost preparers” can encourage people to take advantage of tax benefits they don’t qualify for, then disappear with the victim’s cash and information.
- Fake charities, which exploit taxpayer generosity. These seem to come up after every natural disaster: People trying to exploit a tragedy.
- An oldie but a goodie: So called “offer in compromise mills”. These entities falsely claim their services are needed to resolve debts people have to the IRS, and aggressively mislead people into thinking their tax issues can disappear.
- False Fuel Tax Credit claims. The Fuel Tax Credit is something that most people can’t get access to. It is available only for off-highway businesses and farming use. The IRS says it continues to see instances where promoters mislead taxpayers with fake credits.
- “Helpful” scammers offering to set up an IRS Online Account. In this case, criminals claim they can help set up an Online Account on IRS.gov. In reality, they are trying to get personal tax and financial information that can be used to commit identity theft.
- Questionable Employee Retention Credit (or ERC) claims. The IRS lists this among their “dirty dozen” even though they issued a moratorium on ERC claims in September of 2023. The ERC was a refundable tax credit for businesses that continued paying employees during the COVID-19 pandemic. And finally…
- Phishing and smishing scams. The IRS defines phishing as being done through email, smishing as being done through SMS or text messages. These types of messages usually say “your account has been put on hold” or something similar.
There is also a generational element to these types of schemes. A recent report by the FBI indicates that Americans aged 30-49 are the most vulnerable group to investment fraud.[2] Despite the common belief that older people are more susceptible to scams, the FBI statistics indicate that baby boomers (over 60) came in third in terms of investment scam complaints, behind people age 30-40 and people age 40-49. So, watch out!
[1] Internal Revenue Service. “The Dirty Dozen represents the worst of the worst tax scams.” irs.gov. https://www.irs.gov/newsroom/dirty-dozen (accessed May 31, 2024)
[2] The Press Rundown. “Millennials are more likely to fall for investment scams than boomers.” pressrundown.com. https://www.pressrundown.com/business/millennials-are-more-likely-to-fall-for-investment-scams-than-boomers (accessed May 30, 2024)
This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®. The content provided is intended for educational and informational purposes only. Information is provided in good faith. However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information.
The information presented is designed to provide general information regarding the subject matter covered. It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation
To help reach your goals, you need a skilled professional by your side. Contact your local Security Mutual life insurance advisor today. As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives. For more information, visit us at SMLNY.com/SMLPodcast. If you’ve enjoyed this podcast, tell your friends about it. And be sure to give us a five-star review. And check us out on LinkedIn, YouTube and X (formally Twitter). Thanks for listening, and we’ll talk to you next time.
The applicability of any strategy discussed is dependent upon the particular facts and circumstances. Results may vary, and products and services discussed may not appropriate for all situations. Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently. We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances. Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York. Product availability and features may vary by state.