A lot happened in 2020. The IRS pushed back the usual April 15 deadline to July 15 due to the COVID-19 pandemic. Tax scammers’ activities increase during tax season and times of crisis, and there have been more opportunities than usual for scammers to take advantage of due to coronavirus tax relief and Economic Impact Payments. It is now more important than ever to protect yourself from the worst of the worst tax scams that the IRS labels as “The Dirty Dozen.”
Phishing: Be wary of emails and websites. One of the most common schemes is Phishing, where fake emails contain links to websites that steal personal information. In many cases, these emails and websites look legitimate. In 2020 a lot of these schemes contain keywords such as “coronavirus,” “COVID-19,” and “Stimulus.”
Fake Charities: Criminals frequently like to steal from well-intentioned people trying to help in times of need. One of the ways they do this is to set up fake charities. There is generally a considerable increase in these types of scams during natural disasters or times of crisis like the COVID-19 pandemic.
Threatening Impersonator Phone Calls: It is important to remember that the IRS will never threaten a taxpayer or surprise them with a demand for payment. A popular tactic for criminals is to call taxpayers and claim to be with the IRS. They try to instill fear and urgency to get the victim to comply with their demands.
Social Media Scams: Scammers can use social media platforms to convince their victims that they are close friends or family they trust by impersonating them. They will then send fake links with malware or ask for small donations, etc.
EIP or Refund Theft: Criminals have turned their attention to stealing Economic Impact Payments provided by the Coronavirus Aid, Relief, and Economics (CARES) Act. Much of this comes from identity theft where criminals file false tax returns or supply information to the IRS to divert refunds to different addresses or bank accounts.
Senior Fraud: Seniors are more likely to be targeted by scammers than other segments of society. This is somewhat because seniors may not be as comfortable with evolving technology and social media. Family and friends taking an interest in a senior’s affairs have been shown to substantially reduce the risk of fraud.
Scams targeting non-English speakers: Scammers target groups with limited English proficiency with threatening phone calls. They often request personal or financial information. The scammers may already have some personal information to make the calls seem more legitimate.
Unscrupulous Return Preparers: Taxpayers should always take care in selecting a credible tax preparer. Unscrupulous preparers may promise inflated refunds by claiming fake tax credits or promising a big refund before looking at the taxpayer’s records or charge a fee based on a percentage of the refund.
Offer in Compromise Mills: Taxpayers need to be aware of companies that offer to settle tax debts through an Offer in Compromise (OIC). OIC is available for taxpayers who meet specific criteria to qualify for reducing their tax bill. While many legitimate companies can help, some will collect hefty fees from taxpayers that are already struggling. These unreputable companies are known as OIC “mills.”
Fake Payments with Repayment Demands: This scam works by the criminal stealing the taxpayers’ personal data and filing a bogus tax return with the refund deposited into the taxpayer’s account. The criminal then poses as an IRS employee and explains there was an error and tells the taxpayer to purchase gift cards in the amount of the refund to be sent to the criminal.
Payroll and HR Scams: These types of scams have increased since employees have started working from home due to COVID-19. The two most common types are Business Email Compromise (BEC) and Business Email Spoofing (BES). BEC is where a compromised email account requests gift cards be sent or have direct deposit information changed to reroute to the criminal’s account. BES uses a variety of schemes to request wire transfers, payment of fake invoices, as well as others.
Ransomware: Ransomware is malware that is inadvertently downloaded by a user and can track keystrokes, encrypt data, and infect other machines and data on a network. Victims usually are not aware they have been infected until they try to access their data and receive a ransom request demanding payment to unlock files. Usually, the infection can be removed, and data can be restored if there is a good backup in place. This type of cybercrime is actively evolving, and some of the latest versions have been offloading data. The criminals have then been threatening to publish the information publicly online if they do not receive payment. This can be particularly damaging for businesses that store sensitive data.
It is important to keep in mind that the IRS does not initiate contact with taxypayers by email, text messages or social media and rarely through phone. Mail is the primary means by which the IRS contacts taxpayers. You can report IRS scams online through the Treasury Inspector General for Tax Administration here or call 800-366-4484. If you have received suspicious IRS related emails you can forward them to firstname.lastname@example.org and note that it seems to be a phishing scam. Be aware of these current scams and know what to look for so you do not become a victim.
The full news release from the IRS about “The Dirty Dozen” can be found here.