Dirty Dozen Tax Scams: 2020 Edition - Part I

The "Dirty Dozen" is a list of common tax scams that target taxpayers. Compiled and issued annually every year by the IRS, this year it includes many aggressive and evolving schemes related to coronavirus tax relief, including Economic Impact Payments. The criminals behind these bogus schemes view everyone as potentially easy prey and everyone should be on guard, especially vulnerable populations such as the elderly.

While tax-related scams usually increase at tax time, this year, scam artists are using pandemic to try stealing money and information from honest taxpayers. As such, taxpayers should refrain from engaging potential scammers online or on the phone.

Here are the first six of this year's "Dirty Dozen" tax scams:

1. Phishing

Taxpayers should be alert to potential fake emails or websites looking to steal personal information. IRS Criminal Investigation has seen a tremendous increase in phishing schemes utilizing emails, letters, texts, and links. These phishing schemes are using keywords such as "coronavirus," "COVID-19" and "Stimulus" in various ways.

These schemes are blasted to large numbers of people to get personal identifying information or financial account information, including account numbers and passwords. Most of these new schemes are actively playing on the fear and unknown of the virus and the stimulus payments.

Don't click on links claiming to be from the IRS and be very wary of emails and websites as they may be nothing more than scams to steal personal information. As a reminder, the IRS will never initiate contact with taxpayers via email about a tax bill, refund or Economic Impact Payments.

2. Fake Charities

Criminals frequently exploit natural disasters and other situations such as the current COVID-19 pandemic by setting up fake charities to steal from well-intentioned people trying to help in times of need. Fake charity scams generally rise during disaster times like these.

Fraudulent schemes normally start with unsolicited contact by telephone, text, social media, e-mail, or in-person using a variety of tactics. Bogus websites use names similar to legitimate charities to trick people to send money or provide personal financial information. They may even claim to be working for or on behalf of the IRS to help victims file casualty loss claims and get tax refunds.

Taxpayers should be particularly wary of charities with names like nationally known organizations. Legitimate charities will provide their Employer Identification Number (EIN) if requested, which can be used to verify their legitimacy. Taxpayers can find legitimate and qualified charities using the search tool on IRS.gov.

3. Threatening Impersonator Phone Calls

IRS impersonation scams come in many forms such as receiving threatening phone calls from a criminal claiming to be with the IRS where the scammer attempts to instill fear and urgency in the potential victim. These types of phone scams or "vishing" (voice phishing) pose a major threat. Scam phone calls, including those threatening arrest, deportation or license revocation if the victim doesn't pay a bogus tax bill, are reported to the IRS year-round and are very common. These calls often take the form of a "robocall" (a text-to-speech recorded message with instructions for returning the call).

The fact is, the IRS will never threaten a taxpayer or surprise him or her with a demand for immediate payment. Nor will it threaten, ask for financial information over the phone, or call about an unexpected refund or Economic Impact Payment. Taxpayers should contact the real IRS or consult a tax and accounting professional if they are worried there is a tax problem.

4. Social Media Scams

Social media enables anyone to share information with anyone else on the Internet. Scammers use that information as ammunition for a wide variety of scams. As such, taxpayers need to protect themselves against social media scams, which frequently use events like COVID-19 to try tricking people. These methods of trickery include emails where scammers impersonate someone's family, friends or co-workers.

Social media scams have also led to tax-related identity theft. The basic element of social media scams is convincing a potential victim that he or she is dealing with a person close to them that they trust via email, text or social media messaging.

Using personal information, a scammer may email a potential victim and include a link to something of interest to the recipient which contains malware intended to commit more crimes. Scammers also infiltrate their victim's emails and cell phones to go after their friends and family with fake emails that appear to be real and text messages soliciting, for example, small donations to fake charities that are appealing to the victims.

5. Economic Impact Payment or Refund Theft

Great strides have been made against refund fraud and theft in recent years, but they remain an ongoing threat. Due to the coronavirus pandemic, this year, criminals turned their attention to stealing Economic Impact Payments as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 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.

Recent victims of this type of scam include residents of nursing homes and other care facilities when concerns were raised that people and businesses may be taking advantage of vulnerable populations who received the payments. Economic Impact Payments generally belong to the recipients, not the organizations providing the care.

As a reminder, economic impact 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.

6. Senior Citizen Fraud

Seniors are more likely to be targeted and victimized by scammers than other segments of society and fraud targeting older Americans is pervasive. Financial abuse of seniors is a problem among personal and professional relationships but seems to be less of a problem when the service provider knows that a trusted friend or family member is keeping an eye out and taking an interest in the senior's affairs.

Also, as older Americans become more comfortable with evolving technologies, such as social media, scammers have moved in to take advantage. Phishing scams linked to Covid-19, for example, have been a major threat this filing season. Seniors need to be alert for a continuing surge of fake emails, text messages, websites, and social media attempts to steal personal information.

To Be Continued...


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