Broker Check
The IRS Unveils Their “Dirty Dozen” List of Tax Scams for 2020

The IRS Unveils Their “Dirty Dozen” List of Tax Scams for 2020

July 28, 2020

Every year, the IRS compiles a list of the twelve most-common tax frauds, and, unfortunately, one of the more sobering realities of any pandemic is that it tends to give rise to new disturbing tax scams. The 2020 IRS list that just came out shows that the Covid-19 epidemic has fostered a few things that you and I should be on the lookout for. Let’s take a look . . .

  1. The IRS has reported a significant increase in internet-based “phishing” schemes using keywords such as “coronavirus,” “COVID-19” and “stimulus.” Most of these scams are playing on people’s fear of the virus and the worries about stimulus payments and are blasted out to large numbers of people in an attempt to steal personal identity information or financial account details.
  2. Pandemics tend to be very fertile ground for crooks to set up fake charities to steal our money! Fraudulent schemes normally start with unsolicited contact. Bogus websites use names resembling those of legitimate charities, and crooks might even claim to be working for the IRS, telling you that they are trying to help victims file casualty loss claims and get tax refunds. (Remember: Legitimate charities won’t hesitate to give their Federal Employer Identification Number, so ASK for this information before donating any money.)
  3. We have seen a sharp rise in telephone scams, where the caller threatens arrest, deportation or license revocation if you owe back taxes. Calls such as these often take the form of a robocall. Please remember that the IRS will never demand immediate payment, threaten a taxpayer, ask for financial information over the phone, or call about an unexpected refund or Economic Impact Payment.
  4. Social media (Facebook, Instagram, etc.) enables anyone to electronically share information with anybody else on the internet, and scammers can use that information as ammunition for a wide variety of crimes especially in times of disaster like a pandemic. The basic element of a social media scam is to convince a potential victim that they’re dealing with a trusted person close to them.
  5. The IRS has made great strides in recent years guarding against refund fraud and theft, but these wrongdoings remain an ongoing threat. And recently, criminals have turned their attention to stealing Economic Impact Payments (stimulus checks). The IRS has warned nursing homes and other care facilities that EIPs generally belong to the recipients, not the organizations providing the care. Plus, these stimulus payments don’t count as a resource for determining eligibility for Medicaid and other federal programs.
  6. Seniors are more likely to be targeted and victimized by scammers than any other segment of society. Older Americans are becoming more comfortable with such evolving technologies as social media – but that’s just given crooks another means of taking advantage of us. Phishing scams linked to coronavirus have been a particular threat in 2020.
  7. IRS impersonators and other criminals also target groups with limited English proficiency. Often threatening, these scams target those potentially receiving an Economic Impact Payment and request personal or financial information from the taxpayer. Con artists claiming to be from the IRS may have some of the taxpayer’s information, and will threaten jail time, deportation or revocation of their driver’s license if the target citizen fails to comply with their demands.
  8. Dishonest tax-preparers pop up every tax-filing season committing fraud, harming innocent taxpayers or talking folks into performing illegal acts. With many tax pros impacted by COVID-19 and their offices potentially closed, taxpayers should take particular care in selecting a credible replacement. Be especially aware of “ghost” preparers who won’t sign your tax return. Unscrupulous so-called tax professionals may also promise inflated refunds to entice you.
  9. Misleading tax-debt resolution companies often exaggerate their ability to settle tax debts for pennies on the dollar through what is known as an “offer in compromise.” In 2019, there were 54,000 such offers submitted to the IRS; and only 18,000 were accepted. But unscrupulous tax-resolution crooks oversell the program, casting a wide net for taxpayers, charging them pricey fees and churning out applications for an offer that often hasn’t got a prayer of a chance of being accepted.
  10. One ongoing issue involves a con artist stealing a taxpayer’s personal data, filing a bogus return and having the refund deposited into the taxpayer’s bank account. Once the direct deposit hits the account, the fraudster calls the taxpayer posing as an IRS agent. The taxpayer is told there’s been a bank error not in their favor and that the IRS wants the money back immediately or penalties and interest will result. In some cases, the taxpayer is then instructed to buy specific gift cards for the amount of their refund, which should be a huge “red-flag” for anybody.
  11. Tax professionals, employers and taxpayers need to be on guard against internet phishing scams designed to steal sensitive tax information. This is particularly true with many businesses close their offices and their employees work from home. In one scam, for example, the crook may have access to an employee’s email account and can impersonate the victim to have the organization change the that worker’s direct deposit information to re-route money to an account the fraudster controls.
  12. Ransomware that infects a victim’s computer, network or server is also a growing and troubling cybercrime. This invasive software is often inadvertently downloaded by the user when clicking on a link embedded in what may appear to be a legitimate email. Once downloaded, it tracks keystrokes and other computer activity, finding and locking critical or sensitive data with its own encryption. Victims generally aren’t aware of the attack until they try to access data or when they receive a ransom request in a pop-up window. Cybercriminals might use a phishing email to trick a victim into opening a link or attachment containing the ransomware; these often include email solicitations for fake COVID-19 charities.

So, there you have it. The 2020 IRS Top-12 ways that you can be taken advantage of by a professional thief. Now, some of these schemes sound so simple you wonder why anyone would “fall” for them. And, yet, if crooks weren’t able to effectively perpetrate these crimes, we wouldn’t be reading about them!

So, always be vigilant and always stay alert. Certainly, today, more than ever, it is incumbent on you and me to protect our important information and not let thieves take advantage of us. Be diligent, be smart . . . and be safe.