The IRS on Thursday issued its “Dirty Dozen” tax scams for 2020, pointing out that it was placing special emphasis on aggressive and evolving schemes related to coronavirus tax relief, including economic impact payments (IR-2020-160). “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,” IRS Commissioner Chuck Rettig said.
Here are the 2020 scams:
Phishing: This scam involves fake emails or websites aiming to steal personal information. The IRS emphasizes that it will never initiate contact with taxpayers using email about a tax bill, refund, or economic impact payment. The IRS warns taxpayers not to click on links claiming to be from the IRS and to be alert that emails and websites may be nothing more than scams to steal personal information.
Fake charities: This scam makes the list every year. Criminals frequently exploit natural disasters and other situations such as the current COVID-19 pandemic by setting up fake charities to steal from well-meaning people who want to help in times of need. Unfortunately, fake charities often increase during these times.
Threatening impersonator phone calls: Although IRS impersonation scams come in many forms, a common one is bogus threatening phone calls from a criminal claiming to be with the IRS. The scammer attempts to instill fear and urgency in the potential victim. In fact, the IRS will never threaten a taxpayer or surprise him or her with a demand for immediate payment.
Social media scams: Also new to the list, social media scams frequently use events like COVID-19 to try to trick people. Scammers use information people share on social media for a wide variety of scams, including to send emails impersonating a person’s family, friends, or co-workers.
Economic impact payment or refund theft: Criminals this year also turned their attention to stealing economic impact payments. These schemes involve criminals’ filing false tax returns or supplying other bogus information to the IRS to divert refunds to wrong addresses or bank accounts.
Senior fraud: Senior citizens and their caregivers need to be on alert for tax scams targeting older Americans.
Scams targeting non-English speakers: IRS impersonators and other scammers also target groups with limited English proficiency and are often threatening. Many of the scams also target those potentially receiving an economic impact payment and request personal or financial information from the taxpayer.
Unscrupulous return preparers: This is another recurring item on the list. The IRS emphasizes that selecting the right return preparer is important because preparers have taxpayers’ personal data. Although most tax professionals provide honest, high-quality service, dishonest preparers are around every filing season.
Offer-in-compromise mills: New to the list this year is a warning about misleading tax debt resolution companies that exaggerate their ability to settle tax debts for “pennies on the dollar” through an offer in compromise (OIC). These offers require taxpayers to meet specific legal criteria to qualify. Unscrupulous companies try to enroll unqualified candidates to collect hefty fees from taxpayers who are already struggling with debt.
Fake payments with repayment demands: In this scam, criminals trick taxpayers into sending them their refund. The criminal steals or obtains a taxpayer’s personal data including their Social Security number or individual taxpayer identification number (ITIN) and bank account information and then files a bogus tax return and has the refund deposited into the taxpayer’s checking or savings account. Once the money is in the taxpayer’s bank account, the criminal calls the taxpayer, posing as an IRS employee who tells the taxpayer that there has been an error and that the IRS needs the money returned immediately or penalties and interest will result. This scheme often involves the taxpayer’s being told to buy specific gift cards in the amount of the refund.
The IRS never demands payment of taxes using a specific method. Taxpayers also have the right to question the amount of tax the IRS says they owe. Taxpayers who receive an unexpected refund and a call demanding a refund repayment should reach out to their banking institution and to the IRS.
Payroll and HR scams: Tax professionals, employers, and taxpayers need to be on guard against phishing designed to steal Forms W-2, Wage and Tax Statement, and other tax information. The IRS calls these scams business email compromise (BEC) or business email spoofing (BES). Two of the most common types of these scams are a gift card scam and a direct deposit scam.
Ransomware: Also new to the list, ransomware takes advantage of human and technical weaknesses to infect a victim’s computer, network, or server. Malware, a form of invasive software that the user inadvertently downloads, tracks keystrokes and other computer activity. Once a computer or network is infected, ransomware looks for and locks critical or sensitive data with its own encryption. In some cases, entire computer networks can be shut down.