The Dirty Dozen
- posted: Jul 30, 2020
Every year the Internal Revenue Service announces a list of tax scams, which it terms the “Dirty Dozen”. Tax scams tend to rise during tax season or during times of crisis, and the pandemic is no exception. The IRS encourages everyone to be on the lookout for these scams. Here is this year’s “Dirty Dozen”:
- Phishing: You should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact via email about a tax bill, refund or Economic Impact Payment. Don’t click on links claiming to be from the IRS. This year, the phishing schemes are utilizing emails, letters, and texts using keywords such as “coronavirus”, “COVID-19”, and “Stimulus”.
- Fake Charities: Criminals frequently exploit natural disasters and other situations, such as COVID-19, by setting up fake charities to steal from well-intentioned people. Fake charity scams generally rise during times like these. Fraudulent schemes normally start with unsolicited contact by telephone, text, email, social media, or in-person. Bogus websites use names similar to legitimate charities to trick people to send money. Legitimate charities will provide their Employer Identification Number (EIN), if requested, which can be used to verify their legitimacy. If you are leery about the charity, request the EIN and do your research before giving your money.
- Threatening Impersonator Phone Calls: IRS impersonation scams come in many forms. A common one remains bogus threatening phone calls from a criminal claiming to be with the IRS. The scammer attempts to instill fear and urgency threatening arrest, deportation, or license revocation if you do not pay a bogus tax bill. Sometimes the scammer asks for payment by prepaid debit card or even gift cards. This is something the IRS never does.
- Social Media Scams: Scammers can find information about people on social media. They will use this information to impersonate family, friends, or co-workers. The scammer tries to convince the potential victim that you are dealing with someone close to you and that person needs help paying rent, or donating to a charity, or even asking for bail money.
- EIP or Refund Theft: Much of this stems from identity theft whereby criminals file false tax returns or supply other bogus information to the IRS to divert refunds to wrong addresses or bank accounts. Recently, the IRS warned nursing homes and other care facilities that Economic Impact Payments belong to the recipients, not the organization providing care. These payments do not count as a resource for determining eligibility for Medicaid and other Federal programs. They also do not count as income in determining eligibility for these programs.
- Senior Fraud: Senior citizens and those who care about them need to be on alert for tax scams targeting older Americans. Seniors are more likely to be targeted and victimized by scammers.
- Scams Targeting Non-English Speakers: IRS impersonators and scammers also target groups with limited English proficiency. These scams are often threatening in nature, claiming you will be arrested and deported if you do not immediately pay a bogus tax bill.
- Unscrupulous Return Preparers: Selecting the right return preparer is important. Dishonest preparers pop up every filing season committing fraud, harming innocent taxpayers, or talking taxpayers into doing illegal things. Taxpayers should also avoid “ghost” preparers. Ghost preparers do not sign the tax returns they prepare. Taxpayers should also avoid preparers who promise a large refund without having reviewed any financial information, or who charge fees based on a percentage of the refund. REMEMBER – Taxpayers are ultimately responsible for the accuracy of their tax return, regardless of who prepares it. Always review your return before you sign it.
- Offer in Compromise Mills: Taxpayers can apply for an Offer in Compromise (OIC) for past tax debts if they meet specific criteria. However, unscrupulous companies (known as mills), often oversell the program to unqualified candidates so they can collect a hefty fee.
- Fake Payments with Repayment Demands: Here is how the scam works – a con artist obtains the taxpayer’s personal data including Social Security Number and bank account information. The scammer files a bogus tax return and has the refund deposited into the taxpayer’s bank account. Once the direct deposit hits the taxpayer’s bank account, the fraudster calls them, posing as an IRS employee. The taxpayer is told there has been an error and the IRS needs the money returned immediately or penalties and interest will result. The taxpayer is told to buy specific gift cards for the amount of the refund. The IRS will never demand payment by gift cards. Anytime a taxpayer receives an unexpected refund and a call from the RIS out of the blue demanding repayment, they should reach out to their banking institutions and the IRS.
- Payroll and HR Scams: These scams target someone’s pay check by using the victim’s email account, or impersonate the potential victim, and asking the victim’s employer to change the employee’s direct deposit information to reroute their deposit into another account controlled by the fraudster.
- Ransomware: This is malware targeting human and technical weaknesses to infect a potential victim’s computer, network or server. This invasive software tracks keystrokes and other computer activity, and steals private and sensitive data. The criminal may also use the malware to lock a network or server and send a ransom request.