It’s that time of year again.
The Internal Revenue Service has once again revealed the “Dirty Dozen” tax-related scams. This annual list routinely highlights a mix of old and new threats targeting taxpayers and tax professionals. Since knowing the signs of a scam is one of the most effective ways to prevent falling victim to it, the agency and its partners in the Security Summit work tirelessly to arm Americans with information.
This year’s Dirty Dozen predictably covers COVID-related scams. Rolled out over the course of three days, the IRS says that each scam falls into one of four buckets:
- Pandemic-related scams
- Personal information cons
- Ruses focusing on unsuspecting victims
- Schemes that persuade taxpayers into unscrupulous actions
So, let’s take a look at the first six scams criminals using to steal our personally identifiable information and money.
What are the first six Dirty Dozen scams of 2021?
Economic Impact Payment Theft
The ongoing pandemic has once again proved that scammers shamelessly try to leverage tragedy for profit. When Congress began rolling out Economic Impact Payments in an effort to help struggling Americans, criminals saw the opportunity for an easy payday.
The IRS says that these are the “tell-tale signs of a scam” involving your EIPs:
- Any text messages, random incoming phone calls or emails inquiring about bank account information or requesting recipients to click a link or verify data should be considered suspicious and deleted without opening.
- Be alert to mailbox theft. Frequently check mail and report suspected mail losses to Postal Inspectors.
- Don’t fall for stimulus check scams. The IRS won’t initiate contact by phone, email, text or social media asking for Social Security numbers or other personal or financial information related to Economic Impact Payments.
Perhaps the most common type of scam that we regularly encounter, phishing is particularly effective because it targets people rather than software. The IRS says breaks phishing down into four subcategories for the Dirty Dozen:
- Scams targeting tax professionals that appear to come from ‘IRS Tax E-Filing” or prospective clients.
- Unsolicited impersonator phone calls—also known as “vishing” or “voice-related phishing”—about tax leans that try to get your personal information.
- Impersonator social media messages—usually from a “friend”—that include links to topics you’re interested in that install malware or lead to an information-gathering site.
- Ransomware scams lock down your device until you pay the scammers a ransom, usually in cryptocurrency; this type of scam is what locked down the oil pipeline in the Eastern US a few months back.
Whenever a natural disaster strikes, you can bet on scammers creating fake charity emails, websites, and social media advertisements. They know that good-natured people who see an urgent need might not not investigate whether the charity in their inbox is legitimate.
The IRS says these tips will help you avoid fake charity scams:
- Individuals should never let any caller pressure them. A legitimate charity will be happy to get a donation at any time, so there’s no rush. Donors are encouraged to take time to do the research.
- Potential donors should ask the fundraiser for the charity’s exact name, web address and mailing address, so it can be confirmed later. Some dishonest telemarketers use names that sound like large well-known charities to confuse people.
- Be careful how a donation is paid. Donors should not work with charities that ask them to pay by giving numbers from a gift card or by wiring money. That’s how scammers ask people to pay. It’s safest to pay by credit card or check — and only after having done some research on the charity.
The IRS warns that IRS impersonation scam phone calls “threatening jail time, deportation, or revocation of a driver’s license from someone claiming to be with the IRS” can be especially effective against those who have “limited English proficiency” and seniors.
One way the agency is combatting these scams is by expanding the number of supported languages on IRS.gov and reminding taxpayers that the agency will usually initiate contact in a mailed letter.
Offer in Compromise Mills
Offers in Compromise are a legitimate method the IRS uses to help some taxpayers pay their tax bill, and it’s usually reserved for those who would face a financial burden by paying in full. Unfortunately, the OIC program has seen scammers pop up who promise their customers will save more money or mislead them int thinking “there is a limited window of time to resolve tax debts through the Offer in Compromise (OIC) program.”
The agency says the Offer in Compromise Pre-Qualifier Tool and First Time Penalty Abatement policy can save time and headaches for taxpayers seeking an OIC.
Unscrupulous Tax Return Preparers
Unfortunately, unethical tax return preparers can cause big problems for taxpayers—and give tax pros across the country a bad rap while they’re at it. The IRS says that these scammers often refuse to sign returns they prepare and make unrealistic promises about the refund they can get for clients. Even worse, these “ghost preparers” often leave taxpayers on the hook for penalties and other legal trouble.
The IRS says taxpayers should beware if their preparer does any of the following:
- Require payment in cash only and will not provide a receipt.
- Invent income to qualify their clients for tax credits.
- Claim fake deductions to boost the size of the refund.
- Direct refunds into their bank account, not the taxpayer’s account.
To make sure that taxpayers can make an informed decision about their choice of tax return preparer, the IRS published the “‘Choosing a Tax Professional’ page on IRS.gov.”
Check with us later this month to learn the last six scams included in the 2021 Dirty Dozen.