The IRS list of “Dirty Dozen” tax scams for 2020 focuses on swindles that target taxpayers and coronavirus tax relief.
The agency said the criminals behind these schemes view everyone as easy prey and warned taxpayers to “be on guard all the time” and to look out for others in their lives.
"Tax scams tend to rise during tax season or during times of crisis, and scam artists are using the pandemic to try to steal money and information from honest taxpayers,” IRS Commissioner Chuck Rettig said.
“We will relentlessly pursue criminals trying to steal your money or sensitive personal financial information.”
Throughout the pandemic, the IRS has advised tax professionals working remotely to be wary of data scams.
Taxpayers should be alert to potential fake emails or websites looking to steal personal information.
The IRS will never contact you through email about a tax bill, refund, or Economic Impact Payments.
Don’t click on links claiming to be from the IRS. Be wary of emails and websites—they may be nothing more than scams to steal personal information—as well as keywords like “coronavirus,” “COVID-19,” and “Stimulus” used in various ways.
Here is more on COVID-19 schemes.
Criminals often exploit natural disasters and situations like the pandemic by setting up fake charities to steal from well-meaning people.
Bogus schemes usually begin with an unsolicited phone call, text, social media message, or email.
Fake websites use names similar to legitimate charities to trick people to send money or provide personal financial information.
They may even claim to be working for or on behalf of the IRS to help victims.
Legitimate charities will provide their Employer Identification Number, if requested, which can be used for verification.
More information is available on the IRS website.
Impersonator Phone Calls
A common IRS impersonation scam is bogus threatening phone calls from a criminal claiming to be with the IRS.
The scammer tries to scare the potential victim. In reality, the IRS will never threaten a taxpayer or demand an immediate payment.
Scam phone calls, including those threatening arrest, deportation, or license revocation if the victim doesn’t pay a bogus tax bill, are reported year-round. These often take the form of a “robocall.”
Social Media Scams
Taxpayers must be suspicious of social media scams, which frequently use events like COVID-19 to trick people.
Social media enables scammers to obtain and use family information as ammunition in a wide variety of scams, including emails where scammers impersonate someone’s family, friends, or co-workers.
Social media scams have also led to tax-related identity theft. The basic element of these scams is convincing victims they’re dealing via email, text, or social media messaging with someone they know and trust.
EIP or Refund Theft
The IRS has made strides against refund fraud and theft in recent years, but they remain an ongoing threat.
Criminals this year also turned to stealing Economic Impact Payments related to the coronavirus.
Much of this stems from identity theft where criminals file false tax returns or supply other bogus information to the IRS to divert refunds to wrong addresses or bank accounts.
These payments don't count against determining eligibility for Medicaid and other federal programs.
They also do not count as income for these programs. Here is more information on the payments.
Senior citizens and their caregivers need to be on guard for tax scams.
The IRS is among many government agencies that recognize the pervasiveness of fraud targeting older Americans.
Seniors are more likely than any other segment of the population to be targeted and victimized by scammers.
Financial abuse of seniors is a problem, but if a trusted friend or family member is taking an interest in the senior’s affairs, there’s a smaller likelihood of elder fraud.
Seniors also need to be alert of a continuing surge of fake emails, text messages, websites, and social media attempts to steal personal information.
Scams of Non-English Speakers
IRS impersonators and other scammers also target groups with limited English proficiency, often threatening them.
Some scams focus on those who may receive an Economic Impact Payment and request personal or financial information from the taxpayer.
Phone scams also threaten people with limited access to information, including those uncomfortable with English. These can be robocalls and actual calls.
These con artists may have some of the taxpayer’s information, including their address, the last four digits of their Social Security number, or other personal details, which makes the call seem legitimate.
Taxpayers who are recent immigrants are often vulnerable and should ignore these threats and scammers.
Unscrupulous Return Preparers
Selecting the right tax return preparer is paramount. You are trusting this person with your sensitive personal data.
Most tax professionals provide honest, high-quality service, but dishonest preparers pop up every filing season, committing fraud, even getting taxpayers to do illegal things they later regret.
Taxpayers should avoid so-called ghost preparers who expose their clients to potentially serious filing mistakes, fraud, and a loss of refunds.
Ghost preparers don't sign the tax returns they prepare. By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a Preparer Tax Identification Number.
Taxpayers are ultimately responsible for the accuracy of their tax return, regardless of who prepares it.
Visit this page for tips on choosing a preparer.
Offer in Compromise Mills
Taxpayers need to be wary of misleading tax debt resolution companies that claim to settle debts for “pennies on the dollar” through an Offer in Compromise.
In reality, these offers are only available to taxpayers who meet specific criteria to qualify for reducing their tax bill.
But unscrupulous companies oversell the program so they can collect a hefty fee. These scams, commonly called OIC mills, cast a wide net for taxpayers, charge them pricey fees, and churn out applications for a program for which they’re unlikely to qualify.
Although the OIC program helps thousands of taxpayers each year, not everyone qualifies.
In fiscal 2019, 54,000 OICs were submitted to the IRS but only 18,000 were accepted. Taxpayers can check here to see if they qualify for an OIC.
Fake Payments with Repayment Demands
Criminals are always finding new ways to trick taxpayers, including putting a bogus refund in the taxpayer's bank account.
In this scam, a con artist gets or steals a taxpayer’s personal data, including Social Security and bank account numbers.
The scammer files a bogus tax return and has the refund deposited into the taxpayer’s account.
Once the direct deposit hits the taxpayer’s account, the fraudster calls them, posing as an IRS employee.
The taxpayer is told there’s been an error and the IRS needs the money returned immediately or penalties and interest will result.
The taxpayer is told to buy specific gift cards for the amount of the refund. The IRS will never demand a payment this way.
If taxpayers get an unexpected refund and a call from the IRS demanding a refund repayment, they should contact their bank and the IRS.
Payroll and HR Scams
Tax professionals, employers, and taxpayers need to be on guard against phishing designed to steal W-2 forms and other tax information.
This is especially true with many businesses closed and people working from home.
Two common types of scams are the gift card scam and the direct deposit scam.
In the gift card scam, a compromised email account is often used to send a request to purchase gift cards in various denominations.
In the direct deposit scheme, the fraudster may have access to the victim’s email account.
The scammer may also impersonate the potential victim to have the organization change the employee’s direct deposit information to reroute their deposit to an account the fraudster controls.
These scams have used a variety of ploys, including requests for wire transfers and payment of fake invoices.
In recent years, the IRS has seen variations where fake IRS documents are used to lend legitimacy to the bogus request.
For example, a fraudster may attempt a fake invoice scheme and use what appears to be a legitimate IRS document to help convince the victim.
These scams should be forwarded to the FBI’s Internet Crime Complaint Center.
The IRS asks that W-2 scams be reported to firstname.lastname@example.org (Subject: W-2 Scam).
Ransomware, a growing cybercrime, is malware targeting human and technical weaknesses to infect a potential victim's computer, network, or server.
Malware is a form of invasive software that is often inadvertently downloaded by the user.
Once downloaded, it tracks keystrokes and other computer activity. Ransomware then looks for and locks critical or sensitive data with its own encryption.
In some cases, entire computer networks can be impacted.
Victims usually aren't aware of the attack until they try to access their data, or they receive a ransom request.
These criminals don't want to be traced so they frequently use anonymous messaging platforms and demand payment in virtual currency such as Bitcoin.
A phishing email might try to trick a victim into opening a link or attachment containing the ransomware.
These may include email solicitations to support a fake COVID-19 charity.
Cybercriminals also look for system vulnerabilities where human error is not needed to deliver their malware.
The IRS advises tax professionals and taxpayers to use the free, multi-factor authentication feature being offered on tax preparation software products to protect clients and practitioners' offices from data thefts.