Tax season is finally over, unless you opted for a filing extension until October 15, but tax scams are still brewing. The Internal Revenue Service released its annual Dirty Dozen tax scams today with a warning about aggressive and evolving schemes related to Covid-19 tax relief, especially economic income payments, the stimulus checks meant to help taxpayers through the financial downside of the coronavirus.
“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,” said IRS Commissioner Chuck Rettig.
Here’s a run down of what to watch out for, and how to stay safe.
Phishing. Phishing schemes use emails and links to entice taxpayers to hand over personal information such as account numbers and passwords. In a new twist, scammers are using keywords such as “coronavirus,” “COVID-19” and “Stimulus” to get taxpayers attention. The IRS will not initiate contact with taxpayers via email about a tax bill, refund or Economic Impact Payments. The IRS encourages taxpayers to report phishing scams to the appropriate authorities.
Fake charities. Be extra careful if you get unsolicited requests by email or phone to donate, no matter how worthy the cause sounds. Fraudulent schemes often start with unsolicited contact, the IRS warns. You can use the IRS search tool to search for a charity by “organization name” to see if it is legit. To dig down, click on the latest Form 990 filing and read up on what the charity has been doing.
Watch out for charities with sound-alike names. A one-man-outfit operating as the Black Lives Matter Foundation raised millions of dollars this spring despite the fact that his charity is not connected to the Black Lives Matter movement, causing the New York Attorney General to step in. Forbes Senior Contributor William Barrett tells How Forbes Picked America’s Top Charities For 2019—And What To look For In Yours. Another good resource for where to give with impact is your local community foundation.
Threatening impersonator phone calls. Those calls where the caller says they’re from the IRS and you’d better pay now. Hang up. The IRS will never demand immediate payment, threaten or ask for financial information over the phone. What if they say it’s about your missing stimulus payment or an unexpected refund? Still no!
Social media scams. If an email or text seems fake or suspicious, even if it says its from a relative or friend, call them to double check before you click on that interesting link that might connect you to a scammer.
Economic (stimulus) payment theft. Criminals turned to stealing stimulus checks this year. Not sure if you were due one? The IRS has a guide where you can check your stimulus payment status.
Senior fraud. As older Americans are becoming more tech-savvy, they too are in line for becoming victims of scammers, especially information phishing emails related to Covid-19. Remind the older members of your family to be on the lookout for scams, and consider getting view-only access to their financial accounts, so you can keep an eye out for anything amiss.
Scams targeting non-English speakers. Scammers claiming to be from the IRS are targeting recent immigrants threatening jail time, deportation or revocation of a driver’s license. Do not engage with them, the IRS warns.
Unscrupulous return preparers. Watch out for “ghost” preparers. Legitimate tax preparers have a Preparer Tax Identification Number (PTIN), and they must sign and include their PTIN on returns. Never sign a blank return!
Offer in compromise mills. Need help setting a tax debt? Be cautious who you hire to help. First, use the online Offer in Compromise Pre-qualifier tool on IRS.gov to see if you qualify and get an estimated offer amount. In fiscal year 2019, there were 54,000 offers submitted to the IRS and the agency accepted only 18,000 of them.
Fake payments with repayment demands. If you get a call out of the blue demanding a tax refund repayment, reach out to your bank and to the IRS.
Payroll and HR scams. Scammers are targeting taxpayers at work. Watch out for suspicious requests for wire transfers, payment of fake invoices, and requests to purchase gift cards.
Ransomware. Use the free, multi-factor authentication features offered on tax preparation software. It’s a pain, but the added security can protect you from malware attacks.