The IRS is Going Digital: Dirty Dozen Tax Scams, Refund Changes & Fraud Warnings

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Joel Garris and Christina Maria Lamb break down the IRS Dirty Dozen tax scams, AI-powered fraud, and the IRS’s growing push toward digital refunds, online accounts, and electronic payments.

Dollars & Sense Episode Summary

Tax season may be over, but the risks facing taxpayers are only becoming more sophisticated. In this episode of Dollars & Sense, Joel Garris, CERTIFIED FINANCIAL PLANNER® Professional and Certified Financial Fiduciary™, is joined by Christina Lamb, CF2™, Financial Planner and IRS Enrolled Agent, for a detailed discussion about the IRS Dirty Dozen tax scams, AI-powered fraud, identity theft risks, and the IRS’s accelerating move toward digital systems.

The episode begins with a timely conversation about the current market environment, including the S&P 500’s strong April performance, the surge in AI-related spending by major technology companies, and how inflation continues to impact everyday Americans through rising grocery prices, travel costs, and general living expenses. Joel and Christina explain why investors should avoid emotional reactions to short-term market swings and why diversification and long-term discipline still matter in an increasingly concentrated AI-driven market.

“The market tends to be very forgiving… until it isn’t.”

The discussion then shifts into the IRS Dirty Dozen list — the IRS’s annual warning about the most common tax scams targeting taxpayers and business owners. Joel and Christina walk through phishing emails, smishing texts, AI-generated phone scams, fake charities, misleading social media tax advice, IRS account identity theft, bogus tax credits, ghost tax preparers, fraudulent charitable deduction schemes, refund manipulation tactics, and aggressive offer-in-compromise marketing scams.

Throughout the episode, they explain how scammers create urgency, impersonate the IRS, manipulate taxpayers emotionally, and use technology to make scams appear legitimate. They also discuss why taxpayers should be extremely cautious about viral tax advice online, especially surrounding Roth conversions, PPP-related claims, and “secret” tax loopholes that could ultimately lead to audits, penalties, or worse.

The final segment focuses on one of the biggest long-term changes coming from the IRS: the transition toward fully digital tax systems. Joel and Christina explain why paper refund checks are disappearing, why electronic payments are becoming the standard, how IRS.gov accounts are becoming essential for taxpayers, and why taxpayers should begin adapting now rather than waiting until there is a problem.

“The IRS is clearly going digital, and that’s going to have an impact on the options that taxpayers have.”

For retirees, investors, business owners, and everyday taxpayers, this episode provides practical guidance on protecting personal information, avoiding scams, navigating IRS changes, and making smarter financial decisions in an increasingly digital world.

“If you remember nothing else, slow down. Verify, verify, verify through independent sources and work with trusted professionals to try and avoid becoming a victim of a tax scam.”

10 Key Takeaways

1. The IRS Dirty Dozen scams evolve every year and increasingly use AI-powered technology to target taxpayers.
2. Phishing emails, smishing texts, and fake IRS phone calls are becoming harder to identify because scammers can imitate official government communication.
3. Viral tax advice on social media can create serious tax consequences if taxpayers blindly follow “tax hacks” without professional guidance.
4. Roth conversions may be beneficial for some people but can create large tax liabilities for others depending on income and timing.
5. Ghost tax preparers who refuse to sign tax returns or provide a PTIN are a major red flag.
6. The IRS is aggressively moving away from paper checks and toward electronic refunds and digital payment systems.
7. Taxpayers should create IRS.gov online accounts now rather than waiting until there is a problem.
8. Direct deposit and electronic payments are becoming the fastest and safest ways to handle tax refunds and payments.
9. Taxpayers should never share IRS or Social Security login credentials with third parties.
10. Long-term investors should remain disciplined despite short-term market swings and AI-driven market concentration.

Episode Chapters

00:00 IRS Dirty Dozen Tax Scams Explained
02:05 The Market’s Massive April Rally
04:15 AI Spending & Why Investors Should Pay Attention
07:00 Inflation, Travel Costs & Real-Life Budgeting
10:05 IRS Tax Scams Are Getting Smarter
11:55 Phishing Texts & AI IRS Phone Scams
16:20 Fake Charities & Social Media Tax Advice
19:35 IRS Account Identity Theft Risks
21:25 Fake Tax Credits & Fraudulent Refund Claims
23:10 Ghost Tax Preparers Explained
24:20 Inflated Charitable Donation Scams
25:15 Refund Manipulation & Fake Withholding Claims
27:05 Tax Professionals Being Targeted by Cybercriminals
27:45 “Settle IRS Debt for Pennies” Scams
28:40 The IRS Is Going Fully Digital
30:45 Why Paper Refund Checks Are Disappearing
33:10 Electronic IRS Payments & Online Accounts
35:05 Why Every Taxpayer Needs an IRS.gov Account
36:40 What Happens If You Don’t Have a Bank Account
37:15 Final Tips to Protect Yourself from IRS Scams

Podcast Transcript

Podcast: Dollars & Sense
Episode Date: May 17, 2026
Speakers: Joel Garris, CERTIFIED FINANCIAL PLANNER® Professional, Certified Financial Fiduciary™ and Christina Lamb, CF2™, Financial Planner and IRS Enrolled Agent4

IRS Dirty Dozen Tax Scams Explained

00:00 — Joel Garris, CF2™

This is our annual IRS Dirty Dozen tax schemes that we’d like to do each and every year. Of course, if we’re doing our Dirty Dozen tax schemes, that means that one of our Certified Financial Fiduciaries™ who happens to be an expert in taxes, and by that I mean an IRS Enrolled Agent, Christina Lamb is joining us.

How are you doing this morning?

00:29 — Christina Maria Lamb, CF2™

Good morning, everyone. I’m doing great. Thanks for having me, Joel.

00:33 — Joel Garris, CF2™

My pleasure, as always. You know, this is kind of an annual tradition that you and I have. The IRS every year puts out a list of the sort of the tax schemes or scams that they saw this past tax season and with some specific warnings as to what folks need to avoid.

00:55 — Christina Maria Lamb, CF2™

Yeah, some of them are the same. Some of them have involved, of course, to include some AI stuff. So we’ll go over some interesting tips.

01:02 — Joel Garris, CF2™

So that’ll be good. We will also continue the conversation about the IRS involving its push to digital. We started to kind of tackle this past year, but it’s coming and you’re not going to be able to do anything about it.

01:15 — Christina Maria Lamb, CF2™

Yeah, a little painful for folks, but I like to compare it to kind of what they did with Social Security. You know, you had to make your Social Security go into a bank account. So this is kind of the same thing.

01:26 — Joel Garris, CF2™

And that was a long time ago. It was. That was quite a while ago. I mean, you think that about the how long ago, social security went to that. The reality is that, yeah.

I mean, about time that the IRS sort of catches up, if you will, in a lot of respect. So welcome on in to Dollars & Sense, where we help you make cents out of all of life’s decisions involving your dollars. One of Central Florida’s longest running radio programs, also a top 25 financial planning podcast out there on the worldwide web. To find out how you can connect to our program, just visit our website at NelsonFinancialPlanning.com.

My name, of course, is Joel Garris, CERTIFIED FINANCIAL PLANNER®, Certified Financial Fiduciary™.

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The Market’s Massive April Rally

02:05 — Joel Garris, CF2™

To my left, if you’re watching the YouTube channel, is Christina Lamb, one of our Certified Financial Fiduciaries™ and an IRS Enrolled Agent as well. So before we get to all that tax stuff, you know, the original air date of the program, it’s about mid-May.

Working our way. I think it’s May 17. And the reality is that I saw a bunch of, you and I saw a bunch of statistics this past week that I thought were kind of interesting that would, that were timely and would make an interesting start to the program based on sort of the current economic and market headlines.

02:44 — Christina Maria Lamb, CF2™

Yeah, absolutely. I think there’s some great fun facts to help you understand what’s really going on financially. We’ll keep it kind of conversational.

Because the headlines can be really misleading and loud, especially if you’re listening to the news, but when you slow it down and you listen to what is really interesting and from what is actionable, then you start to understand the bigger picture. So, for April, this month, this past month, the S&P was up… a little over 10%. And that’s the best month since November 2020.

03:17 — Joel Garris, CF2™

Yeah, that was a really a very, very strong month. And then it leads to the question of, okay, well, what happens next? And there’s an old seasonal saying that you sell in May and go away. And, you know, seasonality is kind of more about context. That’s not really necessarily a plan because certainly the market produces returns during the summer months as well.

But important to really kind of have some perspective on what’s going on out there in the markets.

03:48 — Christina Maria Lamb, CF2™

Yeah, so April is historically one of the strongest months in the market, and May is a little bit more mixed, but sometimes you don’t want to bet the whole farm on necessarily what’s going to happen in May. So, the practical takeaway is

Big up months can create a little bit of a performance pressure emotionally, making people feel like maybe they’ve missed something and they have to take some action.

04:14 — Joel Garris, CF2™

Yeah, and these monthly swings from one month to the next, I think, just undermine the ability of folks to maintain that core investment philosophy of being consistent. And, you know, we forget, okay, great, April was a strong month, the strongest month since, you know, probably four or five years, but

But March was not good. And so March, that was the peak of the Iran war. All of that was very much all part of it. So you kind of have to, sort of, as you were saying, Christina, have a plan where you’re not really getting too emotionally involved in kind of what the market is doing from one month to the next.

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AI Spending & Why Investors Should Pay Attention

04:15 — Joel Garris, CF2™

And I think this pattern that we’ve seen just this year and last year and the year before and the year before, it is important to kind of be consistent. Because on the earnings front, I mean, the story there is very, very different from the first quarter earnings season, which we’ve been talking a lot about on prior shows, pretty strong. Q1 earnings for the S&P 500 companies are expected to track almost 28% more from a year ago. That’s the highest growth rate since the fourth quarter of 2021. So interesting backdrop in terms of sort of what’s helping to drive the markets of late, and it comes back to earnings.

05:42 — Christina Maria Lamb, CF2™

Yeah, and I think it seems kind of crazy that earnings have been that good, given what’s going on in the world, you know, the geopolitical stress, the commodity volatility, they still have inflation and interest rate instability. So investors perk up when they hear earnings stay resilient. And it suggests that companies are finding ways to maintain their buying power and their price power.

06:07 — Joel Garris, CF2™

Yeah, no, it’s certainly, you know,

And I apologize for the sneeze. Thank you. Yeah, we’re live. And so the reality is also, you know, with the big conversation about AI is obviously as part of that, I think.

That’s an important nuance where AI is driving a lot of the earnings. But there are also some issues in terms of concentration and kind of how concentrated the market is among these companies that are predominantly these AI companies. And they’re spending a lot of money.

06:42 — Christina Maria Lamb, CF2™

Yeah, I mean, we consider those the hyperscalers. So that’s your alphabet, which is Google, Amazon, Microsoft, and Meta. They have guided a roughly 700-plus billion with a B of capital expenditures for 2026 just for building AI infrastructure, data centers, chips, and power.

07:05 — Joel Garris, CF2™

Really is a staggering number. Four companies. Four companies, a single year, 700 billion spend. I mean, and I guess that’s where it’s an interesting time because you start to think about, okay, well, that’s a massive investment, right? That can create a massive amount of opportunity. But if the opportunity doesn’t quite materialize as much as you think, then you just spend a lot of money, a lot of profit in the example of those companies.

And if the payoff starts to be unclear, well, then that’s where the proverbial rubber is going to hit the road. So a lot of interesting things are certainly happening now in terms of this expenditure on AI and the creation of the infrastructure for that, which then creates other issues when there’s a lot of money kind of getting spent in the overall economy. Christina, you mentioned this. is where inflation comes into play.

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Inflation, Travel Costs & Real-Life Budgeting

07:57 — Christina Maria Lamb, CF2™

Yeah, absolutely. And this is where personal finances and the market world connect. While Wall Street is debating about AI and earnings, Main Street is dealing with the cost of living and groceries, and, you know, coming out of taxis, and myself, I went, you know, I was doing a lot of online grocery shopping because I was busy.

busy. And then I actually went to the grocery store, and I was like, my gosh, ground beef is $9 a pound. Like, when did that happen? My yogurt cup is now $2. It was just $1.25. And the same thing has happened with some leisurely travel. Studies have shown that the cost is jumping up dramatically. So to go to Anchorage, Alaska.

08:40 — Joel Garris, CF2™

It’s a popular summer destination, particularly here in Florida, because it’s really hot. So you go someplace where it’s cool.

08:46 — Christina Maria Lamb, CF2™

For a family of four to travel there. Well, if you go to maybe Gettysburg, Pennsylvania, you’re spending around $3,100, and our very own Clearwater, Florida, is about $3,200, $2,300. So it really depends on where you go and how much you might spend.

09:03 — Joel Garris, CF2™

Yeah, so much like you might sort of be careful in how you spend your dollars when you are investing them. Also, be careful in how you are spending your dollars when you’re actually consuming them on things like vacations and things like that.

That’s because there’s a big gap in terms of how that all plays out, that’s for sure.

09:23 — Christina Maria Lamb, CF2™

Yeah, for sure.

09:24 — Joel Garris, CF2™

So certainly some key takeaways, I think, don’t let one month change your plan, right? I mean, I think that’s always the case, the importance of being consistent. Earnings, though, have been a big part of creating the strong foundation, but watch out for your concentration, obviously, in terms of the overall investment allocation, because a lot of these AI companies have done well, but they’re also spending a lot of money on these capital expenditures. With that, we’re going to take a break and continue here on Dollars & Sense with Joel Garrison and Christina Lamb of Nelson Financial Planning.

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IRS Tax Scams Are Getting Smarter

10:05 — Joel Garris, CF2™

And this is kind of our annual, now we’ve probably done this four, five years now. I would say so.

This is kind of an annual topic that we do right about now in May, on the heels of the release of the IRS, what they refer to as the dirty dozen tax schemes that they saw during the course of this previous tax season. And the reason that we share them with you, our listening audiences, because

We want to make sure that you are aware of them and that you don’t fall victim to them because some of these can cost you a lot of money.

10:43 — Christina Maria Lamb, CF2™

Yeah, absolutely. I mean, this is something every taxpayer should pay attention to, even business owners. And I think a lot of these play into the regular world as well, not just your tax return.

10:54 — Joel Garris, CF2™

Right. No question. And, you know, we’re talking a little bit about AI in the previous segment and how much that’s sort of driving earnings among corporate America.

That’s also making these scams far more sophisticated, and I think that’s really a big issue when it comes to…

kind of how all of these scams ultimately impact people.

11:18 — Christina Maria Lamb, CF2™

Yeah, exactly. According to the IRS, these criminals are constantly adapting the tactics that they use to steal your money, your personal information, and even, you know, entire entities.

11:29 — Joel Garris, CF2™

Yeah, no, it’s pretty dramatic. So our goal today is just kind of walk through these 12 scams, explain what they look like in real life so you can kind of help hopefully identify and give you some clear sort of takeaways so you don’t become a victim.

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Phishing Texts & AI IRS Phone Scams

11:55 — Christina Maria Lamb, CF2™

Yeah, so #1 is phishing and smishing, which again, this helps personally as well, not just with the IRS, but this is where somebody is impersonating the IRS through an email or a text.

12:13 — Joel Garris, CF2™

Yeah, and you’ve probably, I mean, everybody’s seen these. here in Central Florida, there’s been a bunch of them from like the toll department where that comes as a text. But the IRS as well, or at least scammers are also doing that within the IRS. And the crazy thing is that they can look super official. I mean, they can maybe, they use the IRS logo or all of that. I mean, it really is, does give you pause to say, wow, I just, you know, it’s easy to get fooled with the technology that they have. So make sure that you’re paying attention.

12:48 — Christina Maria Lamb, CF2™

Yeah, and the big red flag here is that they’re going to try and get you to verify something to claim a refund. So whether it’s your personal information or your bank information, your social security number, they’re trying to get that information from you. So you should never be verifying it on the phone or email.

13:06 — Joel Garris, CF2™

Yeah, and worse yet, maybe you click on the link and then they install some bad malware and those kinds of things, and then you don’t even

necessarily realize it, that’s for sure. Yeah. So we’ve got a key takeaway then, I guess, on that one.

13:19 — Christina Maria Lamb, CF2™

Yeah, the key takeaway is never click the open links or the links to open attachments in unsolicited messages. You know, if you’re not sure if something is legitimate, as our, you know, security that we use here always says, call the source directly. Don’t call the number in the email, don’t click the link, find your phone number or go to the website directly to check out whatever information might be in question.

13:44 — Joel Garris, CF2™

Yeah, that’s one of the things that we do here at the office, actually. Our cybersecurity training, just as a team, every month we have videos of things that you need to be looking out for to kind of work with the latest and greatest. But then there’s some simulated phishing emails that go out for training purposes to just kind of give folks an idea of, okay,

You really have to be careful when you’re looking at some of the information that appears legitimate, but at the end of the day, it is not. Starting with some of these phone calls as well, which are now AI-generated. That was sort of the other scam that the IRS is warning taxpayers about.

14:27 — Christina Maria Lamb, CF2™

Yeah, so this is #2, and they’re AI phone scams. And these include robocalls, spoof numbers, even voice mimicry to sound incredibly real.

14:38 — Joel Garris, CF2™

I mean, the number of offers, apparently, I’ve been applying for like 5 loans a day for the past year, because I get so many calls about these loan applications that I’ve applied for, and I haven’t applied for any loans. But with the IRS or those types of calls as well, I mean, they can say things like, ” You have to pay now, or we’re going to come and arrest you. I mean, there shouldn’t be so many terrible tragedies, really, when it comes to people just getting taken advantage of with these threats. And they make you feel like you have to do something. And I think that’s the key piece of it.

15:18 — Christina Maria Lamb, CF2™

Yeah. And the truth is the IRS does not call you ever demanding immediate payment. Their first point of contact still to this day is a snail mail letter.

15:31 — Joel Garris, CF2™

Right. I mean, they are the big, scary IRS. And yes, there are certain IRS agents that do carry guns, but they are not going to show up at your house unannounced, knock on the door and say, we’re going to take you off to jail unless you pay us $10,000 right now on the spot.

15:48 — Christina Maria Lamb, CF2™

There’s been many other warnings before that.

15:50 — Joel Garris, CF2™

Correct. It’s a bottom line, if the IRS is, if your phone’s ringing, you pick it up, it’s somebody that says that the IRS, just hang up. It’s not them, even though they may be very good at what they’re trying to say

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Fake Charities & Social Media Tax Advice

16:20 — Joel Garris, CF2™

This next group is sort of the trust-based scams, if you will, where they play on our emotions and catch us in those moments of sort of vulnerability where we might be more willing to trust something and we really shouldn’t.

16:30 — Christina Maria Lamb, CF2™

Yeah. So the first one here is a fake charities, which is really heartbreaking because people are trying to donate to help out a cause. And we obviously have these bad people taking advantage of them.

16:42 — Joel Garris, CF2™

Well, and they spike all of that certainly spikes after disasters or emotional events or things like that. I mean, that’s always kind of the pattern, unfortunately.

16:51 — Christina Maria Lamb, CF2™

Yeah. And people want to help, but scammers generally they’re just collecting information in your personal data as you make these donations. But the IRS does have a tool. So if you see a new charity, especially around a disaster like we do with hurricanes and stuff like that, you can go to this IRS tool. It’s the IRS tax exempt organization search tool, and it’s called TIOS. But that’s how you can verify if a charity is legitimate, especially if you’re using them for the first time for, you know, a particular event that’s happened.

17:24 — Joel Garris, CF2™

Oh, that’s really great. I actually didn’t know about that. So you just get the EI ad number, which every legitimate

17:29 — Joel Garris, CF2™

And it says you can

17:31 — Christina Maria Lamb, CF2™

even search by name. Obviously, the EIN number is going to be more specific, but if you just have the name, at least it’s a starting point to do a little bit of verification.

17:38 — Joel Garris, CF2™

Great resource, great resource. I think that’s very smart. That’s the TIOS system. Yes. Do I have to go to the IRS.gov website to find it?

17:46 — Christina Maria Lamb, CF2™

Yes, and make sure it’s IRS.gov.

17:49 — Joel Garris, CF2™

That’s the right one to go to.com. Right, Yeah, that’s not the right one.

Okay, all right. So that’s good information. Of course, the other thing is that we see, and we’ve certainly seen some real-life examples of this, but just bad, straight-up bad tax advice on social media platforms. I mean, viral content that is telling you to do something that at the end of the day, I mean, it can lead to audits and penalties or worse. Kristen tells a story about a Roth conversion that somebody did.

18:20 — Christina Maria Lamb, CF2™

Yeah, I actually had that down on my notes. I mean, Roth conversion is a huge

what they’re posting in social media right now. And while it may be a helpful tool for some people, it can have huge tax consequences for others, depending on your income. And then a few years ago, it was with the PPP loans, with the COVID, the Personal Payment Protection Program. I mean, that was huge. They were getting people to file these claims fraudulently, and then people were personally liable for that.

18:47 — Joel Garris, CF2™

Yeah, a lot of misleading marketing, as you said, you know, a lot of the conversation about totally tax-free retirement, you know, dual Roths,

conversion, never pay taxes again. There’s so much more behind that. So you have to be careful with the advice that you’re getting on social media. Only really listen to somebody that’s got a radio show, right? Anyway, we’re going to take a break here on Dollars & Sense with Joel Garris and Christina Lam, and we’ll continue the Dirty Dozen tax scams according to the IRS coming up next.

19:19 — Joel Garris, CF2™

Some of these are getting more and more sophisticated.

19:22 — Christina Maria Lamb, CF2™

Yeah, they’re evolving each year and the scale.

Scammers are getting, they’re learning and evolving each year as well.

19:28 — Joel Garris, CF2™

Yeah, and certainly AI is making that even more powerful. I think we’re up to sort of #5 on the list. So we’ll continue the conversation in terms of these scams to watch out for.

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IRS Account Identity Theft Risks

19:35 — Christina Maria Lamb, CF2™

Yeah, so #5 is the identity theft via IRS account access.

And this is where they are somehow getting your login credentials to the IRS website.

19:54 — Joel Garris, CF2™

Yeah, and then along the same path, then using that to file a tax return, often with an inflated refund. And then we see that play out. Then when we try and file a legitimate tax return for an individual and that has already happened, then a legitimate return winds up getting rejected. And that’s what makes things more difficult.

20:16 — Christina Maria Lamb, CF2™

Yeah, or what also can happen

And if somebody is pretending to help you create your account or to sign into your account to perform some sort of task.

So you should never allow a third party to access your accounts with you for the IRS or for other, anything for that matter.

20:34 — Joel Garris, CF2™

Yeah, don’t give away that information where they can log in and pretend they’re you.

20:39 — Joel Garris, CF2™

Only create those IRS accounts directly on IRS.gov.

20:44 — Joel Garris, CF2™

Don’t use third parties.

I mean, that’s so crucially important.

20:48 — Joel Garris, CF2™

to protect your information.

20:49 — Joel Garris, CF2™

And the same thing would apply to like your social security account.

We often tell people you need to, well, and everybody, if you want to collect social security, you’ve got to go through that process of setting up an account directly on the social security website and shouldn’t share that one either.

21:04 — Christina Maria Lamb, CF2™

Yeah, and I think it’s a shame because some of our older folks may need some help doing those things because they don’t have the skills to create those accounts.

But if you do need assistance, again, you have to have to make sure that it is a very trusted source don’t just go to a random person.

21:19 — Joel Garris, CF2™

Next group of sort of the latest and greatest tax scams.

And this one, I think, is brand new for the year.

21:25 — Joel Garris, CF2™

I hadn’t seen this one in the past on previous lists.

21:27 — Joel Garris, CF2™

Yeah, I would agree.

And yeah, I wasn’t really sure what this was all about, but it’s the notion of having making a capital gain claim, but doing it in such a way that you’re taking advantage of a very kind of unique piece of the tax code, trying to get a credit back for capital gains.

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Fake Tax Credits & Fraudulent Refund Claims

21:49 — Christina Maria Lamb, CF2™

Yeah, so this involves the misuse of Form 2439, people claiming credits that they aren’t entitled to.

Now, it’s just not like a regular capital gain.

These are certain capital gains that are involved with investment funds and REIT accounts that they’re trying to

a refund of a tax credit for undistributed capital gains.

So that’s not your normal type of capital gains you’re going to see.

22:13 — Joel Garris, CF2™

Yeah, that’s one of those ones that like totally kind of like completely fabricated.

And I guess bottom line is just as with anything, right?

whether it’s investments or taxes, look, if you don’t quite understand the credit or how on earth that credit might be applicable to you, then you probably want to steer clear of it or at the very least seek professional guidance on how best to utilize a particular credit that may have caught your eye, that’s for sure.

22:41 — Christina Maria Lamb, CF2™

Absolutely.

And that brings us to our next one, which is bogus self-employment tax credit.

So this is when you are claiming self-employment tax, but you first have to have net self-employment income.

22:56 — Christina Maria Lamb, CF2™

Right.

22:57 — Joel Garris, CF2™

Doesn’t work that way.

Yeah, I mean all kinds of kind of silly things when it relies on basically creating.

Deductions or credits that you really aren’t going to ever be entitled to.

And then, of course, there’s a lot of bad actors in the industry as well.

And so that’s part of the IRS’s Dirty Dozen tax scams is to kind of hit that group as well, because there’s certainly some tax preparers out there that are, I guess, a little bit shady at best.

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Ghost Tax Preparers Explained

23:10 — Christina Maria Lamb, CF2™

Yeah, so they call these ghost preparers, and that’s where they’re not willing to sign your tax return or put what’s called a PTIN number at the bottom of the return where they sign.

And all tax professionals have a PTIN.

And if they are preparing your return, they must sign the return and put their number on there.

23:44 — Joel Garris, CF2™

Yeah, because if they don’t, then you’re legally on the hook.

Like that’s a return that basically you sell, in essence, was self-prepared.

And so there’s no professional authority behind it.

So bottom line on this one, very, very simply, look, if you ask somebody to prepare your tax return, and they don’t sign it themselves, then you should not be signing that return because there can be a lot of issues associated with that.

That’s that concept of ghost preparers, if you will.

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Inflated Charitable Donation Scams

24:20 — Joel Garris, CF2™

And then there are the folks who say, oh, well, inflate your charitable deductions or do this, do that.

Inflating non-cash charitable deductions is a big issue.

24:28 — Christina Maria Lamb, CF2™

Yeah, absolutely.

So, this is where they’re after pitching where we’re eliminate some of your tax bill if you put the value of this donated item at a higher price.

And the IRS is very strict with non-cash charitable donations, especially anything over $5,000.

You have to have appraisals and there’s special forms to fill out.

So this would obviously be a high red alert area to do something like that.

24:54 — Joel Garris, CF2™

If you’re donating a shirt you got 15 years ago from the gap, okay, it’s not worth $100.

I don’t care if you say it’s vintage or not.

I mean, if it sounds like, something that just doesn’t make sense, it’s probably tax fraud and you want to steer clear of it.

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Refund Manipulation & Fake Withholding Claims

25:15 — Joel Garris, CF2™

We got three more on the list.

Obviously, the next one involves kind of just sort of manipulating refunds, much like the last couple we were talking about.

But this one involves sort of putting down that you had more tax withholding than in fact you actually did.

25:30 — Christina Maria Lamb, CF2™

Encouraging folks to inflate their tax withholding numbers to generate larger refunds.

So this means the preparer is suggesting that you claim more tax withholding than was reported on your tax documentation, which is completely illegal.

And the IRS actually verifies these numbers.

So it is definitely going to be a red flag.

25:52 — Joel Garris, CF2™

Yeah, the IRS is getting copied on everything.

I mean, your W-2, the form W-2 that you got, I mean, that’s not the only copy floating around.

The IRS has one as well, and their computer systems, while they may be somewhat outdated, they are in fact pretty good at matching up that information.

So if you’re putting some numbers down that don’t match what they actually are, you’re going to wind up getting into some significant trouble as well.

And that trouble doesn’t start with just the individuals.

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Tax Professionals Being Targeted by Cybercriminals

27:05 — Joel Garris, CF2™

A lot of tax professionals are also targets of scams as well.

27:05 — Christina Maria Lamb, CF2™

Yeah, so that’s something even as a tax professional, I get emails from directly from the IRS warning tax preparers of,

folks trying to take advantage and steal information from tax professionals because they have so much of it in one, one’s place.

26:50 — Joel Garris, CF2™

Yeah, no, a trove of client data, social security numbers, dates of birth, all.

26:56 — Christina Maria Lamb, CF2™

I mean, everything they would possibly need, you have to put on the tax reduction.

26:59 — Joel Garris, CF2™

Correct.

Yeah, no, absolutely.

Absolutely.

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“Settle IRS Debt for Pennies” Scams

27:45 — Joel Garris, CF2™

And then lastly is the office in compromise.

Which are these types of sort of mills, if you will, that have taken over the employee retention credits mills from COVID of a few years ago.

Now you’ve got these offers in compromise that say, hey, you can settle for the IRS for pennies on the dollar, I assure you.

27:21 — Christina Maria Lamb, CF2™

And the IRS has another tool here.

It is the IRS offer and compromise tool.

And again, you just go to irs.gov.

You can find this tool there, and it goes over your income, expenses, assets to determine if you are even possibly eligible for an offer and compromise, which most people are not.

27:41 — Joel Garris, CF2™

Bottom line on all of these, okay, there are some key pieces, key ways to prevent you becoming a victim of that.

So, what’s some of the kind of the main topics or takeaways for folks?

27:55 — Christina Maria Lamb, CF2™

Yeah, so you don’t want to click unknown links, hang up on specitious calls, report phishing, act quickly for identity theft, and always use trusted tax professionals.

28:08 — Joel Garris, CF2™

Yeah, if you remember nothing else, slow down.

Verify, verify, verify through independent sources and work with trusted professionals to try and avoid becoming a victim of a tax scam.

With that, we’re going to take a break and continue the conversation.

We’ll talk next about the push by the IRS going into the digital world as well and how it’s going to impact you.

Coming up next here on Dollars & Sense with Joel Garrison, Christina Lam of Nelson Financial Planning.

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The IRS Is Going Fully Digital

28:40 — Joel Garris, CF2™

Continuing on our discussion on this week’s episode of Dollars & Sense with sort of a conversation about the IRS. I wanted to also tackle this topic, Christina, because this is happening. It’s not going anywhere. It’s only going to accelerate.

The IRS is clearly going digital, and that’s going to have an impact on the options that taxpayers have.

29:08 — Christina Maria Lamb, CF2™

Yeah.

So, you know, regardless of whether you want it to or not, this is happening, and the IRS no longer wants to be sending out checks for refunds or receive checks for payments.

29:22 — Joel Garris, CF2™

Yeah, it’s a big push.

I mean, that move away from paper checks, more reliance on bank accounts, and really pushing everybody to use that online account portal at IRS.gov.

And I get it.

We certainly had some pushback from clients on this. Oh, I don’t want to share my information with the IRS, things like that.But Social Security’s already done this years ago.

And this is not a new thing. US government already knows everything about you anyway. I would agree.

I think this is just a natural push by the IRS to try and modernize and to reduce fraud and those kinds of things. Because that’s really why the IRS is going digital.

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Why Paper Refund Checks Are Disappearing

30:45 — Christina Maria Lamb, CF2™

Yeah, I mean, and it makes sense, to be honest.

I mean, handling paper checks, I mean, we’ve seen when people send in paper checks, they don’t get accredited to the right account.

Doing it online just makes it more efficient and work more properly for them.

31:00 — Joel Garris, CF2™

Yeah, and the paper checks are far more likely to get.

31:04 — Christina Maria Lamb, CF2™

Yes.

31:05 — Joel Garris, CF2™

Electronic payments clearly faster.

And ultimately, the goal there is to reduce some of the costs, right?

Generating a paper check is going to be more expensive. The goal is to kind of reduce the fraud, reduce the administrative costs. That’s what they’re trying to do in sort of this digital transition.

31:23 — Christina Maria Lamb, CF2™

Yeah, and you know, as you said, the paper checks are just more vulnerable.

And as the IRS has started phasing out paper checks in 2025, the refunds are issued electronically and primarily through direct deposit.

31:37 — Joel Garris, CF2™

Yeah, I mean, the key here is that, look, this shift is about security, it’s about speed, it’s about efficiency, beyond just kind of the convenience factor.

And so it is the push.

The days of sending in a paper check to the IRS are clearly in the rearview mirror at this point, right?

31:56 — Christina Maria Lamb, CF2™

And if you try to avoid this and don’t add bank information to your refund or to your return, they will possibly send you a letter making you do this via their online account, which is going to be harder than just adding it to the tax return.

Or it can take up to 12 weeks to get a refund check.

32:17 — Joel Garris, CF2™

Yeah, I mean, so there’s, you know, they’re the IRS. So if you don’t play by their latest rules, then they won’t be so inclined to play by the rules, period. So the move to digital and providing your bank account information.

It’s so crucially important. It’s a big shift from the days of just saying, oh, just I’ll mail you a check or you guys mail me a check. That doesn’t actually work anymore.

32:41 — Christina Maria Lamb, CF2™

Yeah, exactly. Direct deposit is just much faster.

In many cases, refunds were issued in 21 days electronically compared to much longer for the paper checks. And we personally saw about a two-week turnaround if you linked your bank information.

So that’s pretty quick for when the return was e-filed.

32:59 — Joel Garris, CF2™

Now, I mean, the key ingredient is you’ve really got to make sure that you are providing your accurate bank account information.

You’ve got to have all of the digits of the bank account. You’ve got to make sure that that’s accurate.

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Electronic IRS Payments & Online Accounts

33:10 — Christina Maria Lamb, CF2™

Yeah, because if not, then your refund can get delayed or sent to the wrong account.

And the IRS does not move quickly to fix mistakes like that.

33:22 — Joel Garris, CF2™

No, no, they certainly don’t. And then from the payment side, same thing. The IRS wants electronic payments.

Whether that’s ACH debit, credit card, IRS Direct Pay, EFTPS for businesses, all of those systems are really where the IRS wants people going.

33:44 — Christina Maria Lamb, CF2™

Yeah, and they want people using those systems because they create tracking, they create verification, and frankly it reduces processing errors.

33:56 — Joel Garris, CF2™

And less fraud.

34:00 — Christina Maria Lamb, CF2™

Absolutely.

34:02 — Joel Garris, CF2™

I mean, paper checks get lost.

People steal them out of mailboxes. People wash checks. There’s all kinds of issues that happen there.

34:12 — Christina Maria Lamb, CF2™

And then if you mail something in and the IRS posts it incorrectly, now you’re trying to prove you paid it.

34:20 — Joel Garris, CF2™

Right.

And if you have the electronic confirmation, you’ve got timestamps, you’ve got tracking, you’ve got all of that documentation.

So while people may not necessarily love the transition, there are some legitimate reasons why the IRS is doing it.

34:37 — Christina Maria Lamb, CF2™

And I think one of the biggest things is taxpayers need to stop waiting until there’s a problem to set up these online systems.

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Why Every Taxpayer Needs an IRS.gov Account

35:05 — Christina Maria Lamb, CF2™

You really should have your IRS.gov online account set up before there’s ever an issue.

35:14 — Joel Garris, CF2™

Yeah, because if your identity gets stolen or somebody files a fake return or something like that, and now you’re trying to create the account after the fact, it becomes much more difficult.

35:28 — Christina Maria Lamb, CF2™

Exactly.

And inside those accounts, you can see prior tax filings, balances due, notices, payment history, and estimated payments.

There’s a lot of useful information there.

35:42 — Joel Garris, CF2™

And again, just like with Social Security, create those accounts directly through the official government website.

35:50 — Christina Maria Lamb, CF2™

IRS.gov only.

35:52 — Joel Garris, CF2™

Correct. Don’t use third parties. Don’t let random people help you create those accounts.

36:00 — Christina Maria Lamb, CF2™

And if you do need assistance, just make sure it’s somebody you trust implicitly because you’re giving them access to very, very sensitive information.

36:12 — Joel Garris, CF2™

Right.

And unfortunately, scammers know that some people are uncomfortable with technology and they try to exploit that discomfort.

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What Happens If You Don’t Have a Bank Account

36:40 — Joel Garris, CF2™

Now, some folks may say, okay, well, what if I don’t have a traditional bank account?

36:46 — Christina Maria Lamb, CF2™

Yeah, there are still options. There are prepaid debit cards.

There are certain financial service providers that can receive direct deposits. So there are ways to still participate in the digital system even if you don’t use a traditional checking account.

37:02 — Joel Garris, CF2™

Right.

So the bottom line is the IRS is moving this direction whether taxpayers like it or not.

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Final Tips to Protect Yourself from IRS Scams

37:15 — Joel Garris, CF2™

So final takeaway here. Slow down.

Verify everything independently. Don’t trust links.

Don’t trust incoming phone calls. Don’t trust unsolicited emails or texts.

37:29 — Christina Maria Lamb, CF2™

And only work with trusted tax professionals.

Make sure your preparer signs your return.

Protect your IRS login credentials and create your IRS.gov account directly through the government website.

37:42 — Joel Garris, CF2™

Yeah, and if you do those things, you’re going to dramatically reduce the likelihood that you become a victim of one of these scams.

So with that, we appreciate you spending part of your weekend with us here on Dollars & Sense with Joel Garris and Christina Lamb of Nelson Financial Planning.

Have a great week, everybody.

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Next Steps

If you’d like help reviewing your financial plan, investment strategy, or retirement readiness, explore the resources available through Nelson Financial Planning or schedule a consultation to discuss your goals.