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:
- 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.
- 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.
- 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.
- 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.
Impersonating the IRS is a favorite way for scammers to intimidate their victims. Who isn’t afraid of the IRS? It’s gotten even worse recently with all those tempting Economic Impact Payments and other COVID-19 funding just waiting to be stolen. Email phishing scams allow criminals to hit thousands of potential victims in seconds, and then sit back and watch how much money they can reel in.
At the end of March, the IRS warned about another IRS impersonation scam that targets educational institutions, including students and staff who have “.edu” email addresses. The scam emails display the IRS logo and use various subject lines to get potential victims’ attention, such as “Tax Refund Payment” or “Recalculation of your tax refund payment.”
The phishing emails ask people to click a link and submit a form to claim their refund. Who wouldn’t want a refund, right? The problem is, the link asks for all kinds of personal information, like:
- Social Security number
- First Name
- Last Name
- Date of Birth
- Prior Year Annual Gross Income (AGI)
- Driver’s License Number
- Current Address
- State/U.S. Territory
- ZIP Code/Postal Code
- Electronic Filing PIN
The IRS would never ask for personal information. So, what should you do with a scam email?
Resist temptation to open or reply to any suspicious email, no matter how enticing. And don’t even think about clicking on a link in a suspicious email!
- Report to Authorities and Delete
Report phishing emails to the Federal Trade Commission at www.ftc.gov/complaint and to the Anti-Phishing Working Group at [email protected]. Forward tax-related emails to the IRS at [email protected]. After reporting, delete the original email.
Need more protection and detection help? The IRS has it for you here – https://www.irs.gov/businesses/small-businesses-self-employed/tax-scams-how-to-report-them and the Federal Trade Commission has more for you here – https://reportfraud.ftc.gov/#/?pid=A.
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.
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:
- The IRS initiates most contacts through regular mail delivered by the United States Postal Service.
- 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
- 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
- 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.