Published: October 16, 2020 on our newsletter Security Fraud News & Alerts Newsletter.
The IRS posted its annual list of the top tax scams for 2020, called the “Dirty Dozen.” Every year, the IRS takes a look at the most prevalent tax scams affecting U.S. taxpayers. In its continued effort to keep us safe from tax fraudsters, the IRS tells us what these scams can look like. They also remind us that although scams increase during tax time and crisis events, they continue to happen year-round. The IRS says no one in the organization ever uses email, phone calls, or texts to initiate communication. Rather, they always use the mail for direct communication with taxpayers. Going directly to the true IRS website is recommended to help answer questions about tax concerns and to provide the truth behind the lies that tax fraudsters use to scam the public.
2020 Dirty Dozen Tax Scams
Phishing. The IRS notes a massive increase in phishing schemes, mostly surrounding the fears of coronavirus and stimulus payments. Criminals use emails, texts and links to get our attention with keywords like “coronavirus,” “COVID-19,” “Economic Stimulus,” and more. The IRS warns us not to click on links, open suspicious emails, or visit websites you’re unsure about, saying they’re all scams to steal PII (personally identifiable information.)
Fake Charities. Bad actors love taking advantage of crisis moments like natural disasters and the current pandemic. They setup and solicit donations to fake charities with the goal of harvesting financial information used to make the donations. Those “donations” go directly into hacker’s coffers and can lead to further financial scams.
Threatening impersonator phone calls. Also known as “vishing,” voice scams use phone calls to harass victims and scare them into acting. The caller claims to be from the IRS, using tactics like threatening arrest and deportation if the victim does not pay the bogus tax bill. The IRS tells us to contact their offices directly, using legitimate sources, to find out if there truly is a tax problem. Don’t act hastily. Remember, the IRS will only contact you via US mail.
Social Media Scams. In a world where social media holds all types of PII, taxpayers need to be vigilant about text, email, and social media messaging. That warning includes those pretending to be from trusted contacts, including friends and family members. The FBI reminds us to never open an attachment or follow a link unless you can absolutely verify the sender. Attachments can hold malware and links can lead to a bogus website designed to steal your PII.
EIP or Refund Theft. Tax refund fraud and theft is an ongoing threat despite FBI efforts against it. Criminals set their sights on stealing Economic Impact Payments from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The FBI warns that identity theft allows hackers to file false tax returns and give fake information allowing funds to be diverted to their bank accounts and other addresses.
Senior Fraud. Tax scams targeting American seniors happen more often than other segments of society. Those who care for seniors need to be alert about the potential tax scams and other fraud targeting this group. The IRS warns about this abuse and is joined by the FBI, Department of Justice, Consumer Financial Protection Bureau, and the Federal Trade Commission with its warnings.
Payroll and HR Scams. Phishing in the form of Business Email Compromise (BEC) can steal tax information from employers, taxpayers, and tax professionals. These scams have increased due to coronavirus and the number of employees now working from home. The IRS warns us to be alert about phishing designed to steal Form W-2s and other tax information. Gift card and direct deposit scams are most commonly used for this fraud.
Fake Payments with Repayment Demands. Criminals are always finding new ways to trick taxpayer’s into believing them. This scam works when the fraudster files a bogus tax return in a victim’s name and has the refund sent to the victim’s bank account. Posing as an IRS employee, the scammer then calls the taxpayer, telling them the refund was a mistake and threatening penalties and interest on the refund amount. The IRS warns about unexpected refunds and phone calls demanding repayment, telling victims to immediately notify their bank and the IRS about the events.
Ransomware. This malware infects a potential victim’s computer, network, or server by targeting human and technical weaknesses. Often arriving as an email attachment, ransomware looks for sensitive data and locks it from access using encryption. Entire data systems can be locked, and bad actors demand a payment, usually in Bitcoin or other virtual currency, to return the data to working order. Aside from not opening attachments, users can also backup their devices, including mobile, to the cloud or a backup drive. The ability to restore your own data is the best defense against ransomware attacks.
Scams Targeting Non-English Speakers. Those whose primary language is not English are especially vulnerable to scams. These tax scams are typically aggressive in nature and can involve threats of deportation and jail if not complied with. Criminals may also have taxpayer PII including the last four digits of their Social Security number, address and more, all making the thief appear legitimate. Utilizing fear tactics to steal personal and financial information is what scammers rely on for success.
Unscrupulous Return Preparers. Dishonest tax preparers always pop up during tax filing season. They’re ready to lie, cheat, and steal their way into creating fraudulent tax returns or talking victims into illegal acts. Taxpayers are the ones who pay the price since they are ultimately responsible for their tax return accuracy, no matter who prepares it. The IRS stresses the importance of choosing a credible tax preparer, especially during the pandemic. Take the time to do research.
Offer in Compromise Mills. Tax debt resolution companies can be unscrupulous about helping those who owe taxes, promising to negotiate lower tax bills while also charging hefty fees for their services. In fact, very few legitimately qualify for an Offer in Compromise (OIC), but to the scammer it makes no difference. Last year, there were 54,000 OICs filed with the IRS and only 18,000 were accepted. The IRS reminds taxpayers to be cautious about whom they hire for tax debt help.
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