Scam High Alert – It’s Tax Season

Tax filing season officially started last Monday. The race to meet the April 18 deadline is on! Scammers are on a deadline, too. Scam artists prey on their victims all year long, but cybercrime activity seems to spike during tax season. They just can’t resist all those opportunities to fool or intimidate taxpayers who are in the middle of an unpleasant task that makes them nervous and vulnerable, especially online. Consequently, the IRS advises taxpayers to be on Scam High Alert during this filing season.

Since 2014, the IRS has issued an annual list of the “Dirty Dozen” top tax scams. The list is based on actual scams reported to its investigative and law enforcement units. The top twelve for 2021include five scams that are more likely to occur during tax season, targeting taxpayers with malicious intent to steal their refunds, bank account number, or personal information. 

Here are five of the 2021 tax-related scams highlighted by the IRS:

  1. Fake Charities:

Criminals frequently exploit natural disasters and other times of crisis by setting up fake charities to steal from well-intentioned people trying to help in times of need. Unfortunately, this is nothing new. The current COVID-19 pandemic and recent natural disasters are examples where scammers take advantage of your compassion.

  1. Immigrant and Senior Fraud: 

IRS impersonators and other phone scammers are known to target vulnerable people, like those with limited English proficiency and senior citizens. These scams are often threatening in nature, like where a taxpayer receives a telephone call threatening jail time, deportation, or revocation of a driver’s license from someone claiming to be with the IRS.

3. Offer in Compromise Mills:

Misleading tax debt resolution companies can exaggerate the chance to settle tax debts for “pennies on the dollar” through an Offer in Compromise (OIC) for a hefty fee. Later, the taxpayer learns that she or he is not one of the small number of individuals who are qualified to even apply for an OIC, after the fee is paid and it’s too late.

4. Unscrupulous Return Preparers:

Most tax professionals provide honest, high-quality service, but dishonest preparers pop up every filing season. They commit fraud, harming innocent taxpayers, or talk taxpayers into doing illegal things, like inflating deductions. These scammers may also have taxpayers deposit refunds into tax preparer accounts.

  1. Unemployment Insurance Fraud: 

Unemployment fraud often involves individuals acting in coordination with or against employers and financial institutions to get state and local assistance to which they are not entitled. These scams include submitting fraudulent applications and using stolen or fake identification information to perpetrate an account takeover.


The IRS helps taxpayers to be on Scam High Alert all year round, but especially during tax filing season, by issuing its annual “Dirty Dozen” top tax scam list. To learn more about these scams for the 2021 filing season, check out the IRS website at https://www.irs.gov/newsroom/irs-dirty-dozen-list-warns-people-to-watch-out-for-tax-related-scams-involving-fake-charities-ghost-preparers-and-other-schemes.

Suspect Fraud? Report it!

Phishing emails, IRS impersonator calls, fake bank wire instructions. The list of methods to commit fraud or scam people out of their money has exploded! Scammers and fraudsters are brilliant at using technology to reach more victims. They even use online dating to commit “romance scams” and extract funds from mostly older Americans seeking companionship.

And those fraud methods sure are working! In 2020, identity fraud and other related scams cost American consumers a total of about $56 billion, impacting about 49 million victims. That’s according to data from the 2021 Identity Fraud Study by Javelin Strategy & Research released back in March. The Federal Trade Commission (FTC) reports that romance scams were the costliest to older Americans, who suffered almost $84 million in financial losses in 2020. 

What should you do if you are, or think you may be a victim of fraud, scam, or unscrupulous business practices? The FTC has a dedicated website for victims to file a report and obtain guidance with “next steps” based on the type of scam. 

Check it out at https://reportfraud.ftc.gov/#/. Here’s how it works:

What can I report?

The FTC recommends that consumers report any action or experience that they think might be a fraud, scam, or unscrupulous business practice. Fraud and scams related to COVID-19 are rampant these days. FTC has more information about how to decide whether to report your experience at https://www.consumer.ftc.gov/.

I’m not sure if it’s a scam or fraud — should I still report it?

Absolutely! If your experience feels wrong, even if it’s minimal, the FTC wants to know about it. Reporting fraud or potential fraud gives the FTC and its 3,000 law enforcement partners valuable information to spot patterns and enforce the law. The website also allows consumers to update and track reported fraud cases.

Can I file a report if I don’t live in the U.S.?

Yes! Report your experience on https://econsumer.gov/#crnt. This site shares your reported information with the FTC. In addition, it partners with 35+ consumer protection agencies across the world to identify trends and prevent scams. The site is available in English, Spanish, French, German, Korean, Japanese, Polish, and Turkish.

Methods to commit frauds and scams have exploded. Fraudsters used technology to steal over $56 billion in 2020 alone. If you are, or think that you may have been, a fraud victim, make sure that you report it to the FTC. Your action makes a difference by helping 3,000+ law enforcers spot problems and patterns. Learn more about scams, how to submit a report, and how the FTC works to stop them at https://www.consumer.ftc.gov/.

Tax Collector or Scam Artist?

For years, the IRS and law enforcement have warned taxpayers about scam artists posing as revenue agents. Imposters call and threaten whoever answers with arrest for past-due income taxes. Warnings from law enforcement tell taxpayers to hang up and report the call to the IRS and the Federal Trade Commission (FTC). However, the next time you get a call about past-due taxes, it could be legitimate. 

Here’s why you might not want to hang up on a call about past-due taxes. Beginning Thursday, Sept. 23, 2021, some taxpayers with unpaid tax bills started to get calls from one of three private agencies contracted by the IRS to help with collection efforts. Four facts you need to know before you decide whether to hang up on that caller:

  • The IRS always notifies taxpayers in writing multiple times before transferring their account to a private collection agency, or PCA. The IRS also sends a letter to the taxpayer informing them that their account was assigned to a PCA and giving the name and contact information for the PCA. Following IRS notification, the PCA will send its own letter to the taxpayer confirming the account transfer. 
  • Help with collection efforts is not new for the IRS. The program was established in 2016, as authorized under federal law. At that time, the agency contracted with several agencies to collect certain unpaid tax debts on the government’s behalf. Persistent understaffing, compounded by the pandemic, made it necessary to use private collections as an option to pursue past due income taxes. 
  • The three Private Debt Collection agencies contracted by the IRS are CBE Group, Inc., Coast Professional, Inc., and ConServ. All private collectors will identify themselves as contractors collecting taxes on behalf of the IRS. For taxpayer protection, collection agencies employees must follow the provisions of the Fair Debt Collection Practices Act, must be courteous, and must respect taxpayer rights.
  • Private firms are not authorized to take enforcement actions against taxpayers, like IRS employees can do. The private firms are only authorized to discuss payment options with taxpayers, including setting up payment agreements. All tax payments must be made directly to the IRS, never to the private firm or anyone besides the IRS or the U.S. Treasury.

Despite warnings about scam artists posing as revenue agents, some calls about past due taxes are legitimate. The IRS recently contracted with three private collection agencies to help them out, so it might not be the IRS calling. You’ll want to remember the four facts explained above to determine if that caller is a valid tax collector or a scam artist, so you don’t hang up when you should stay on the line.

IRS “Dirty Dozen” Top Tax Scams for 2021

In late June, the IRS announced its Dirty Dozen Top Tax Scams for 2021. Unfortunately, the top scams don’t change much from year to year. That’s why the IRS works hard annually to communicate the different illegal schemes perpetrated by scammers against millions of people. 

This year, the IRS began its “Dirty Dozen” list for 2021 with a warning to tax professionals, taxpayers, and financial institutions to be on the lookout for scams that fall into four categories:

  1. Pandemic-related scams
  • EIP or Refund Theft: Refund fraud and theft remain an ongoing threat. Criminals this year also turned their attention to stealing Economic Impact Payments (EIP) provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 
  • Unemployment Fraud: Taxpayers who lost their jobs because of the pandemic were eligible to receive unemployment benefits. Unclaimed unemployment benefits claimed by scammers using stolen personal information is reported as taxable income to the taxpayer, not the scammer.
  1. Personal information cons
  • Phishing: Don’t click on links claiming to be from the IRS because it could be a fake email looking to steal personal information. Be wary of any emails with embedded links − they may be nothing more than scams to steal confidential financial information.
  • Ransomware: Ransomware is malware that infects a victim’s computer, network or server and looks for and locks critical or sensitive data with its own encryption. In some cases, entire computer networks can be adversely impacted until the ransom is paid.
  1. Ruses focusing on unsuspecting victims 
  • Senior Fraud: Seniors are more likely to be targeted by scammers than other people. They are also becoming more comfortable with evolving technologies, such as social media. Unfortunately, that gives scammers another means of taking advantage.
  • Threatening Impersonator Phone Calls: A common scam is a bogus threatening phone call from a criminal claiming to be with the IRS. The scammer attempts to instill fear and urgency in the potential victim.
  1. Schemes that persuade taxpayers into unscrupulous actions 
  • Unscrupulous Return Preparers: Most tax professionals provide honest, high-quality service, but dishonest preparers pop up every filing season. They commit fraud, harming innocent taxpayers, or talk taxpayers into doing illegal things, like inflating deductions.
  • Offer in Compromise Mills: Misleading tax debt resolution companies can exaggerate the chance to settle tax debts for “pennies on the dollar” through an Offer in Compromise (OIC) for a hefty fee. Turns out, an OIC is only available to a small number of qualified taxpayers.

Don’t get caught by one of the IRS “Dirty Dozen” top tax scams. Read about how to protect yourself here –  https://www.irs.gov/newsroom/irs-wraps-up-its-2021-dirty-dozen-scams-list-with-warning-about-promoted-abusive-arrangements.

Attempted Ransomware Scam Averted

Within hours of writing last week’s blog post, Low-Cost Cybersecurity Tips, I was the victim of a ransomware attempt. Ironic, eh? The scammer’s approach was sophisticated and targeted. I was drawn in by the message, initially replied, and was astounded by what happened next. Good news – this story has a happy ending. But it could have turned out much differently.

I’m sharing this recent brush with cybercrime to illustrate just how insidious online scammers are, and how capable they are of masquerading as a trusted sender. Perhaps reading about my experience will help you avert a ransomware or other cybercrime.

As an established tax professional, I often receive emails from prospective tax clients. Some are referred or introduced to me by an existing client or referral partner. Some prospective clients find me through my website or the IRS’ Tax Pro Directory. On May 20th, I received a message from an individual saying that he and his wife needed a new tax preparer. He acknowledged that he had missed the May 17th filing deadline and provided a few details about their income. He asked me to tell him how much it would cost to prepare their 2020 income tax returns.

Even though I am not taking new tax clients now, I didn’t want to be rude and not respond. I also wanted to be as helpful as possible to a taxpayer in need without committing to perform any work. So, I took a few minutes to write back to explain that I am not available and to share an IRS website link with tips for finding a tax professional and a directory by location of individuals with tax credentials (https://www.irs.gov/tax-professionals/choosing-a-tax-professional).

I noticed that the sender’s email address contained extensions that indicated his location to be in the United Kingdom. That did not make me suspicious of the sender’s identity because I have tax client who live or used to live in the UK. It did, however, prompt me to also send the prospective client another IRS link to information about US taxpayers living overseas (https://www.irs.gov/individuals/international-taxpayers/u-s-taxpayers-residing-outside-the-united-states). Feeling like I had done a good deed, I hit “send”.

Within a few minutes, I received a second message from the sender saying that he had scanned his 2019 returns for my review with a link to access the return copy. Red flag! I stopped in my tracks to absorb what I was reading. It was a clear indication that my “prospective client” was a scammer luring me to click on a link that would probably have held my data for ransom. My valuable tax client files that that contain all sorts of confidential and private information, like bank account and Social Security numbers.

I quickly shifted from “helpful” to “obstructive”. I erased the message string and dumped my email trash. It’s only been a few days, but it looks like that scammer is not coming back. I managed to avert that ransomware scam attempt, but there will be others. We all need to be aware and diligent to avert them. Want some tips? Check out last week’s blog post!

Beware of Scams During Tax Season

Scam artists prey on their victims all year long, but scam activity seems to spike during tax season. It must be “prime time” to snare victims because they are more abundant – everyone is preparing and filing their returns to meet the April 15 deadline. Scammers can’t resist all those opportunities to fool or intimidate taxpayers who are in the middle of an unpleasant task that makes them nervous and vulnerable, especially online.

Since 2014, the IRS has announced its “Dirty Dozen” top tax scams. The top twelve for 2020 include five scams that are more likely to occur during tax season, targeting taxpayers with malicious intent to steal their refunds, bank account number, or personal information. Here are alerts to watch out for on the five tax-related scams highlighted by the IRS:

  • Phishing: Taxpayers should be alert to potential fake emails looking to steal personal information. Don’t click on links claiming to be from the IRS, or any other sender you’re not expecting or that you do not know. Be wary of emails with embedded links or invitations to see or learn more − they may be nothing more than scams to steal personal information.
  • Unscrupulous Return Preparers: Most tax professionals provide honest, high-quality service, but dishonest preparers pop up every filing season. They commit fraud, harming innocent taxpayers, or talk taxpayers into doing illegal things, like inflating deductions. These scammers may also have taxpayers deposit refunds into tax preparer accounts.
  • Offer in Compromise Mills: Misleading tax debt resolution companies can exaggerate the chance to settle tax debts for “pennies on the dollar” through an Offer in Compromise (OIC) for a hefty fee. Later, the taxpayer learns that she or he is not one of the small number of individuals who are qualified to even apply for an OIC, after the fee is paid and it’s too late.
  • Fake Charities: Criminals frequently exploit natural disasters and other times of crisis by setting up fake charities to steal from well-intentioned people trying to help in times of need. Unfortunately, this is nothing new. The current COVID-19 pandemic and recent winter storms in Texas are examples where scammers take advantage of your compassion.
  • EIP or Refund Theft: Refund fraud and theft remain a pervasive threat. In this past year, criminals also turned their attention to stealing Economic Impact Payments (EIP) as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Scammers often defraud taxpayers by promising payments more quickly but divert the payments instead.

Don’t get caught up in one of these top tax scams while you are busy filing your 2020 income tax returns. To learn more about these scams and how to protect yourself, check out the IRS website at https://www.irs.gov/newsroom/irs-unveils-dirty-dozen-list-of-tax-scams-for-2020-americans-urged-to-be-vigilant-to-these-threats-during-the-pandemic-and-its-aftermath

Phishing for your Tax Dollars

I hadn’t quite decided on this week’s blog topic when I saw an e-mail snagged in my spam folder. The sender was “IRS”. The heading was “Second Notice of Delinquent Taxes”. What a gift! A blog topic!

 

Like many taxpayers who receive a message from the “IRS” dunning them for cash, I knew that I didn’t owe the IRS anything. Thankfully, I knew better than to open or reply to it. Keep reading to know how to identify phishing, and what to do when it happens to you.

1.      What is phishing?

 

Phishing is a scam usually done through unsolicited email and/or websites that pose as legitimate senders or sites. Scammers use phishing to lure unsuspecting victims to provide personal and financial information. Bogus emails can appear to come from the IRS or your tax professional requesting information, including mother’s maiden name, passport and account information that is used to steal your identity and assets.

 

  1. How do I know if it’s phishing or really the IRS?

 

The easiest way to check for phishing is to place your cursor over the sender’s name, revealing the sender’s e-mail address. An address that doesn’t look legitimate is probably a scam. For the IRS, anything other than “irs.gov” is suspect. The IRS doesn’t initiate contact with taxpayers by email, texts or social media to request money or financial information. Most IRS communication is still through the good, old-fashioned USPS.

 

  1. What should I do with a phishing e-mail claiming to be from the IRS?

 

If you receive an email claiming to be from the IRS that contains a request for delinquent tax balances or financial information, immediately do the following:

 

  1. Don’t reply.
  2. Don’t open any attachments. They can contain malicious code that may infect your computer or mobile phone.
  3. Don’t click on any links. Visit the IRS’ identity protection page if you clicked on links in a suspicious email or website and entered confidential information.
  4. Forward the email as-is to the IRS at [email protected].
  5. Delete the original email.

 

Don’t get phished! When you get an e-mail that looks suspicious or is from an unfamiliar sender, stop and check it out before deciding to open it. If it’s phishing for your tax dollars, don’t even think about opening it! Just forward to [email protected] and delete!

 

Tax Scam Calls Still Happening

It’s still happening. It happened to me just last week. I came home to a voicemail telling me that four warrants are out for my arrest and I need to pay up or turn myself in. Of course, the caller conveniently provided a callback number. The caller also sounded automated. Who would fall for that? You might be surprised…

 

Hundreds of unsuspecting taxpayers are still being defrauded of thousands of dollars. Otherwise, the scam callers would stop. It wouldn’t be worth their time. Taxpayers should not take the bait and fall for this trick. But it can be really intimidating to get a threatening call about what is already a scary topic – your taxes.

 

Four tips to help taxpayers avoid getting scared enough to become a scam victim:

 

  1. The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

 

  1. The real IRS will not:
  • Call to demand immediate payment
  • Call someone who owes taxes without first sending a bill in the mail
  • Demand tax payment without allowing the taxpayer to appeal the amount owed
  • Require a taxpayer to pay in a certain way, such as with a prepaid debit card
  • Ask for credit or debit card numbers over the phone
  • Threaten to bring in law enforcement to arrest a taxpayer who doesn’t pay
  • Threaten a lawsuit

 

  1. Special circumstances when the IRS will come to a home or business include:
  • When a taxpayer has an overdue tax bill
  • When the IRS needs to secure a delinquent tax return or a delinquent employment tax payment
  • To tour a business as part of an audit
  • As part of a criminal investigation

 

  1. IRS Revenue Agents who may conduct a visit to a taxpayers home or business carry two forms of official identification that have serial numbers. Taxpayers can check both IDs. Revenue Agents conducting audits may call taxpayers to set up appointments, after having first notified them by mail. By the time the IRS visits a taxpayer at home, the taxpayer would be well aware of the audit.

 

Have you been called or visited by someone impersonating the IRS? Don’t be scared or intimidated. Hang up the phone and visit IRS.gov for information about how to detect and report tax scams.