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What Scams are in the IRS 2020 Dirty Dozen?

Every year, the Internal Revenue Service highlights twelve tax scams that fraudsters are using to steal taxpayer information and money. Anyone who has ever suffered identity theft knows that having their personally identifiable information hijacked is just a step away from having money stolen. After all, criminals use PII to fraudulently apply for bank accounts, credit cards, loans, and other financial services—directly impacting victims’ financial health.

While this list covers scams the IRS has seen throughout the year, the press release notes that criminals are extraordinarily nimble when it comes to evolving their tactics. IRS Commissioner Chuck Rettig specifically cites crises as a time when these belly-crawling vipers strike.

“‘Tax scams tend to rise during tax season or during times of crisis, and scam artists are using pandemic to try stealing money and information from honest taxpayers,’ said IRS Commissioner Chuck Rettig. ‘The IRS provides the Dirty Dozen list to help raise awareness about common scams that fraudsters use to target people. We urge people to watch out for these scams. The IRS is doing its part to protect Americans. We will relentlessly pursue criminals trying to steal your money or sensitive personal financial information.’”

What is the list of Dirty Dozen scams for 2020?

Tax professionals will recognize some of the “Billboard chart toppers” from last year, like phishing and fake charities. New in 2020 are schemes like EIP theft and robocalls to non-English speakers. Without further ado, here’s the full list:

  • Phishing
  • Fake Charities
  • Threatening Impersonator Phone Calls
  • Social Media Scams
  • EIP or Refund Theft
  • Senior Fraud
  • Scams Targeting Non-English Speakers
  • Unscrupulous Return Preparers
  • Offer in Compromise Mills
  • Fake Payments with Repayment Demands
  • Payroll and HR Scams
  • Ransomware

To be fair, almost all of the Dirty Dozen could be categorized as a type of phishing scam: criminals impersonating a legitimate government or private organization in an attempt to get victims to part with their money or PII. However, Offer in Compromise mills and fake payments with repayment demands might need a little more explanation.

As a tax professional, you may have personally recommended delinquent clients seek an Offer in Compromise to help settle their outstanding tax bill. According to the IRS, an Offer in Compromise mill “[oversells] the program to unqualified candidates so they can collect a hefty fee from taxpayers already struggling with debt.” To avoid falling victim to this scam, the IRS recommends taxpayers use the Offer in Compromise Pre-Qualifier tool, which “[confirms] eligibility and provides an estimated offer amount.”

Fake payment and repayment demand scams occur when a criminal uses a victim’s PII to file a tax return. The twist is that they don’t pocket the refund money. “The scammer files a bogus tax return and has the refund deposited into the taxpayer’s checking or savings account,” the IRS explains. “Once the direct deposit hits the taxpayer’s bank account, the fraudster places a call to them, posing as an IRS employee. The taxpayer is told that there’s been an error and that the IRS needs the money returned immediately or penalties and interest will result. The taxpayer is told to buy specific gift cards for the amount of the refund.”

The IRS closes the press release by recommending readers keep an eye out for upcoming lists of “illegal schemes and techniques businesses and individuals use to avoid paying their lawful tax liability … [including] abusive micro captives and fraudulent conservation easements.” Ultimately, our federal tax agency wants to help taxpayers meet their tax obligations, a goal that includes educational outreach and enforcement.

To learn more about all twelve scams, visit IRS.gov.

Source: IR-2020-160

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