The Internal Revenue Service announces its annual “Dirty Dozen” list of tax scams involving aggressive and evolving schemes related to coronavirus tax relief, including economic impact payments.
The Dirty Dozen focuses on scams targeting taxpayers as “easy prey,” according to a press release advising everyone to be on guard all the time and look out for others in their lives.
“Scammers are active year-round trying to steal money from American taxpayers. This pandemic and extended tax season provides even more opportunities for these criminals,” said Acting Special Agent in Charge Tara Sullivan in a prepared statement.
“We hope this Dirty Dozen list warns everyone about the common scams that fraudsters are using to steal from people.”
Beware of these scams by refraining to engage potential scammers online or on the phone:
Phishing: Be alert to potential fake emails or websites looking to steal personal information since the IRS never initiates contact with taxpayers via email about a tax bill, refund or Economic Impact Payments.
Avoid clicking on links claiming to be from the IRS, which has noted an increase in schemes through emails, letters, texts and links using keywords such as “coronavirus,” “COVID-19” and “Stimulus” in various ways.
Fake Charities: Fake charities are set up to steal from well-intentioned people trying to help in times of need and normally start with unsolicited contact by telephone, text, social media, e-mail or in-person using tactics such as bogus websites with names similar to legitimate charities to trick people to send money or provide personal financial information, even claiming to work with the IRS.
Threatening Impersonator Phone Calls: IRS impersonation scams come in many forms including bogus phone calls from a criminal claiming to be with the IRS, instilling fear and urgency in the potential victim.
The IRS never threatens taxpayers, demands immediate payment or asks for financial information by phone; or call about an unexpected refund or Economic Impact Payment.
Social Media Scams: Social media scams frequently use events like COVID-19 to trick people through platforms that enable anyone to share information on the Internet for scammers to use that information for various scams such as impersonating someone’s family, friends or co-workers; plus tax-related identity theft.
Using personal information, a scammer may email a potential victim and include a link that contains malware intended to commit more crimes like infiltrating the victim’s emails and cell phones to target their friends and family with fake emails appearing real and soliciting donations to fake charities via text messages.
EIP or Refund Theft: Refund fraud and theft remain an ongoing threat as criminals steal Economic Impact Payments as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, stemming from identity theft involving filing false tax returns or supplying other bogus information to the IRS to divert refunds to wrong addresses or bank accounts.
Senior Fraud: Senior citizens and those who care about them need to beware of tax scams targeting older Americans vulnerable to be targeted and victimized by scammers more than other segments of society. Financial abuse of seniors is a problem among personal and professional relationships.
Scams targeting non-English speakers: IRS impersonators and other scammers also target groups with limited English proficiency and are often threaten jail time, deportation or revocation of a driver’s license from someone claiming to be with the IRS. Recent immigrants often are the most vulnerable and should ignore these threats and not engage the scammers.
Unscrupulous Return Preparers: Selecting the right return preparer is important as they are entrusted with a taxpayer’s sensitive personal data but dishonest preparers surface to commit fraud, harming innocent taxpayers or talking taxpayers into doing illegal things they regret later; avoid “ghost” preparers who expose their clients to potentially serious filing mistakes through possible tax fraud that risks losing refunds by not signing tax returns they prepare.
For e-filed returns, the ghost preparer will prepare but not digitally sign as the paid preparer. Or Unscrupulous preparers promise inflated refunds by claiming fake tax credits, including education credits, the Earned Income Tax Credit (EITC) and others.
Offer in Compromise Mills: Beware of misleading tax debt resolution companies that can exaggerate chances to settle tax debts for “pennies on the dollar” through an Offer in Compromise (OIC), which unscrupulous companies oversell the program to unqualified candidates to collect a hefty fee from taxpayers already struggling with debt.
Fake Payments with Repayment Demands: Criminals always find new ways to trick taxpayers into believing their scam including depositing a bogus refund into the taxpayer’s bank account. When the direct deposit hits the taxpayer’s bank account, the fraudster calls them, posing as an IRS employee informing of an error and that the money has to be returned immediately or else penalties and interest will result.
Payroll and HR Scams: Tax professionals, employers and taxpayers need to watch against phishing designed to steal Form W-2s and other tax information. These are Business Email Compromise (BEC) or Business Email Spoofing (BES). Two of the most common types of these scams are the gift card scam and the direct deposit scam.
Ransomware: A growing cybercrime of Ransomware is malware targeting human and technical weaknesses to infect a potential victim’s computer, network or server.
Malware is a form of invasive software that is often frequently inadvertently downloaded by the user and tracks keystrokes and other computer activity. Once infected, ransomware looks for and locks critical or sensitive data with its own encryption.
See: irs.gov for more details.