This week, we continue our series on the recently issued IRS “Dirty Dozen” tax scams. We went over the first four items on the list last time. This week, we’ll focus on numbers five through seven.
Number five on the Dirty Dozen is a sad reminder, as the IRS put it, that scammers are still using the COVID-18 pandemic to steal people’s money and identities.
These dangers can emerge from social media, emails, texts, and phone calls, and such scams have proliferated during the pandemic.
“Caution and awareness are our best lines of defence against these criminals” who steal tax refunds, IRS Commissioner Charles Rettig was quoted as saying. Here are some of the things thieves try and, sadly, are often successful at:
Economic impact payment and tax refund fraud – It is important to note that the IRS has issued all authorized EIPs, also known as stimulus payments and that the majority of eligible taxpayers have already received them.
There simply aren’t any more. Any text message, unexpected phone call, or email asking a taxpayer to provide or verify bank account information is a tell-tale sign of an EIP scam.
The IRS does not initiate taxpayer contact by phone, email, text, or social media asking for a Social Security number or other personal or financial information, the IRS stated, repeating a frequent caution.
Keep an eye out for mailbox theft. Check your mail regularly and report any suspected mail losses to postal inspectors.
Unemployment fraud and incorrect Forms 1099-G – A Form 1099-G, Certain Government Payments, reporting unemployment benefits a taxpayer did not receive, or more benefits than received, may be evidence that someone fraudulently filed for state unemployment benefits using your personal information.
If you are affected, you should contact the appropriate state agency for a corrected form. The US Department of Labor’s website has more information on state reporting of unemployment fraud.
False job offers – Job postings on social media may be bogus and used to entice taxpayers to provide personal and financial information.
Fake charities – Unfortunately, as the need for assistance has grown during the pandemic, so have fake charity scams.
A caller who puts pressure on you for a donation, as well as a request to pay by gift card or wire, are both red flags. Make sure you know to whom you are giving.
The IRS warned taxpayers with tax bills to contact the IRS directly rather than going to unscrupulous tax companies that falsely claim they can resolve unpaid taxes for pennies on the dollar.
Common ruses include:
Offer in Compromise (OIC) mills – A taxpayer with IRS debt can legitimately enter into an OIC with the IRS to pay an agreed amount based on the taxpayer’s calculated ability to pay a larger tax debt.
“OIC mills” make exaggerated claims that they can settle with the IRS for “pennies on the dollar,” but then charge exorbitant fees, often in the thousands of dollars. Promoters may even encourage the submission of an OIC application that they know is ineligible.
“No one can get a better deal for taxpayers than they can usually get for themselves by working directly with the IRS to resolve their tax issues,” IRS Commissioner Charles Rettig said in a statement.
‘Ghost’ preparers and inflated refunds –
The IRS stated that paid income tax preparers are required by law to sign the returns they prepare for compensation and to include their valid preparer tax identification number on the return (PTIN).
You should be wary of preparers who refuse to sign the returns they prepare, also known as ghost preparers.
For e-filed returns, the “ghost” will prepare the return but refuse to digitally sign as the paid preparer. Do not do business with such preparers; they are up to no good, including generating fraudulent refunds that they then use to steal your identity.
Suspicious Communications – For the seventh item on the list, the IRS notes that thieves are looking to file a fraudulent refund claim using your information, and may attempt to steal your information by posing as an IRS representative.
If criminals obtain such information, they can quickly use it to file a bogus tax return in the hopes that it has not already been used to file a return for that tax year.
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If this happens to you, you may not be aware of the theft until you attempt to file a legitimate return that is rejected by the IRS.
This happened to a client of mine earlier this year, and both he and I can attest to the enormous trouble this causes, not to mention the hassle factor.
Fraudsters use bogus text messages, so-called email “phishing” scams, and even phoney phone calls in which they “spoof” the caller ID to trick you into handing over your sensitive information.
As I’ve said many times before, JUST SAY NO to such attempts, as they will NEVER be from the actual IRS. The IRS will use a text message as a second factor to authenticate users’ identities when they access online self-help tools, but only after the user has entered valid login information on the IRS’s website.
