The “Dirty Dozen” Tax Scams
07 / 23 / 20

The “Dirty Dozen” Tax Scams

Being scammed can happen to any of us. Scammers view anyone as an easy target, which is why each year, the IRS releases a list of 12 of the most prevalent and threatening Tax Scams. Let’s see what made the list on the IRS’ 2020 “Dirty Dozen”:

  1. PHISHING. Phishing can happen to anyone since we use the internet for most things that we do now. Always remember that the IRS will not contact you via email or text message about a tax bill, refund, or Economic Impact Payments. These emails, texts, and web links are blasted to many people through electronic means in hopes to retrieve financial account information such as bank account numbers and financial institution passwords. A lot of these scams are sent under the premise of a COVID-19 update, because this is something that gets a lot of attention currently.
  2. FAKE CHARITIES. Scammers are taking advantage of the COVID-19 pandemic by posing as charities set out to raise money and awareness for Coronavirus relief. Again, keep an eye out for these “charities” contacting you by telephone, text, social media, or e-mail. If you feel called to donate to a charity that has contacted in you in a request for donations, remember that legitimate charities will provide their Employer Identification Number (EIN) and can also be found listed in an IRS database of Tax Exempt Organizations. We encourage you to do your research before you give!
  3. THREATENING IMPERSONATOR PHONE CALLS. Be vigilant in who you share payment information with over the phone. Many scammers call and say that you need to pay them, the “IRS”, immediately or you will be arrested, deported, etc. Please keep in mind the IRS will never call you demanding payment immediately and over the phone. If you believe this may be a real claim, consult with your Tax Professional or contact the IRS directly using contact information you can verify as legitimate, not the phone number this person is giving you.
  4. SOCIAL MEDIA SCAMS. Another scam on the list is Social Media Scams. Scammers pose as your friend or someone you trust to get you to either give your information or click on a link you may be interested in. Be aware of these scams, and if you get an email, Facebook message, etc. that does not seem legitimate, do not click on the link. Clicking on this link can not only give the scammer access to your information, but also your friends’ information.
  5. RANSOMWARE. Scammers may use an email to trick you into opening a link or attachment. Once infected with ransomware, it looks for and locks critical or sensitive data. Then, when you try to open it, they will anonymously message you to send them money in order to gain control again.
  6. FRAUDULENT TAX RETURNS. Scammers recently started stealing other taxpayers’ refunds and Economic Impact Payments that were provided by the CARES Act. This identity theft involved false tax returns or false account information being given to the IRS in an effort to redirect refunds to the scammer’s addresses or bank accounts. In particular on this scam, growing concerns that businesses may be taking advantage of the vulnerable population led the IRS to recently issue a warning to nursing homes and other care facilities that Economic Impact Payments belonged to the recipients, not the facilities providing the care.
  7. SENIOR FRAUD. The IRS, Department of Justice, FBI, Federal Trade Commission, and the Consumer Financial Protection Bureau all recognize and look out for Senior Fraud, which is a growing issue. Senior citizens are more likely to be targeted by scammers and should be on the lookout for fake emails, text messages, websites, and social media attempts to steal personal information.
  8. PAYROLL AND HR SCAMS. Tax professionals, employers and taxpayers should be on the lookout for phishing designed to steal Form W-2s and other tax information, especially now with many businesses closed and employees working from home due to Covid-19. The two most common types of this scam are the gift card scam and direct deposit scam. The gift card scam includes compromised email accounts that send requests to purchase gift cards in various denominations. In the direct deposit scam, the scammer may have access to the victim’s email account and impersonate the victim to have their employer change the direct deposit account information to redirect their payroll deposits to the account the scammer holds.
  9. OFFER IN COMPROMISE MILLS. If you keep up with our Tax Resolution successes, you know that t’s no secret that Offers in Compromise are available for taxpayers who meet certain criteria, and that accepted Offers in Compromise reduce a taxpayer’s tax bill. There are Tax Resolution companies out there that will claim to be able to settle any and everyone’s tax debts for “pennies on the dollar” through an OIC. Blanket guarantees as such allow these companies oversell these services to unqualified candidates just so they can charge people a hefty fee. To avoid having this happen to you, consult with a local, reputable Tax Resolution law firm to assist you. (May we suggest Bryson Law Firm, LLC?)
  10. FAKE PAYMENTS WITH REPAYMENT DEMANDS. In this scam, scammers will obtain personal information and will monitor accounts for direct deposits. Once the money is deposited, they will call the individual and demand that they buy specific gift cards to repay the money. To avoid this, please understand that the IRS will never demand payment by a specific method, there are many options.
  11. NON-ENGLISH OR LIMITED ENGLISH SPEAKING GROUPS. This involves scammers who call these groups of people threatening jail time, deportation, or revocation of a driver’s license. This could be very scary for recent immigrants, but you should avoid engaging with these scammers.
  12. UNSCRUPULOUS RETURN PREPARERS. Be diligent in choosing the right person to prepare your tax returns. There are tax preparers that the IRS refers to as “ghost preparers” who purposefully expose their clients to serious filing mistakes as well as tax fraud. They do not sign the tax returns they prepare and instead print it out and tell the taxpayer to sign and send it to the IRS directly, or they will not digitally sign the e-filed returns in an effort to avoid the ramifications when the return is deemed incorrect. Know that anyone who prepares or assists in preparing federal tax returns must have a Preparer Tax Identification Number and include said number and their signature on returns. Taxpayers should avoid any preparers who ask them to sign a blank return or promise a large refund before looking at their records or charge fees based on a percentage of the refund.

If you have any questions or concerns regarding scams, please feel free to contact Bryson Law Firm, LLC.