Continued from IRS Updates “Dirty Dozen” Tax Schemes for 2020 (Part 1)
- Scams targeting non-English speakers: Recent immigrants are often vulnerable to telephone calls claiming to be from the IRS that threaten jail time, deportation, license revocation and other consequences unless financial information is given. Groups with limited English proficiency are often a hot target for scammers.
- Unscrupulous return preparers: Tax return preparers have access to your personal data, which is why selecting a trustworthy preparer is so important. Though they are not the majority, there are dishonest preparers out there. The IRS warns to avoid “ghost” preparers, who do not sign the returns they prepare and instead asks the taxpayer to sign and submit to the IRS. Anyone who is paid to prepare or assist in preparing federal tax returns must have a PTIN (preparer tax identification number) and sign the return.
- Offer–in-compromise mills: This is new to the list this year and involves misleading tax debt resolution companies that over-exaggerate their ability to settle tax debts for “pennies on the dollar” via an offer in compromise (OIC). OICs require that taxpayers meet specific legal qualifications, and these companies attempt to enroll unqualified candidates in order to collect hefty fees from them.
- Fake payments with repayment demands: In this scam, the criminal already has the taxpayers’ personal data, and files a bogus tax return with the refund sent to the taxpayers bank account. Once the money is in the taxpayers’ account, the criminal calls the taxpayer claiming that there has been an error and the money must be returned immediately or there will be penalties and interest. Oftentimes they will request gift cards in the amount of the refund. To avoid falling for this, know that the IRS will never demand payment of taxes using a specific method. If a taxpayer receives an unexpected refund or a demand for refund repayment they should reach out to their bank and to the IRS.
- Payroll & HR scams: These are phishing attempts designed to steal Forms W-2 and other tax information. The most common types include a gift card scam and a direct deposit scam. Gift card scams use a compromised email account to send requests to purchase gift cards. The direct deposit scam involves the criminal attempting to impersonate the victim to have an organization change the employee’s direct deposit info.
- Ransomware: Malware is an invasive software the users can accidentally or inadvertently download onto their computer or network. Once infected, it looks for and locks critical or sensitive data with its own encryption, or it shuts down entire networks. The criminals can then hold this data ransom and anonymously request payment in the form of virtual currency.
Please always be cautious and careful when dealing with sensitive information. And, when in doubt, feel free to contact your Henry+Horne tax preparer with any questions.
Haley Braun, CPA