IRS’s ‘Dirty Dozen’ tax scams for 2021

Your Guide to State, Local, Federal, Estate + International Taxation

The IRS has recently released their “Dirty Dozen” list of the 12 most common tax scams to be on the lookout for. They are categorized as pandemic-related scams, personal information cons, ruses focusing on unsuspecting victims and schemes that persuade taxpayers into unscrupulous actions.

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  • Phishing – Taxpayers should be wary to potentially fake emails or websites that would steal personal information, the IRS Criminal investigation has seen an increase in phishing schemes using keywords “coronavirus,” “COVID-19” and “Stimulus” within emails, letters, texts and links. The IRS will never initiate contact with taxpayers via email about a tax bill, refund or Economic Impact Payments (EIP).
  • Fake Charities – Criminals will frequently exploit natural disasters by creating fake charities to steal from well-intentioned individuals during a time of need. With the Covid-19 Pandemic these fake charities are on a rise. The IRS has a search tool to find legitimate and qualified charities.
  • Threatening Impersonator Phone Calls – A very common scam consisting of a call from the “IRS” that is threatening to instill fear and urgency to the potential victim demanding for immediate payment. The IRS will never demand immediate payment, threaten, ask for any financial information over the phone or call about refunds and EIP.
  • Social Media Scams – Taxpayers should protect themselves from social media scams as they will use shared information to impersonate family or friends in a variety of scams.
  • Economic Impact Payments (EIP) or Refund Theft – This year has brought criminals to steal EIP, though refund theft is an ongoing problem the IRS is making great strides against it. Many of these are identity theft related as criminals will file false tax return or information to divert refunds to the wrong address or bank accounts.
  • Senior Fraud – The IRS along with other departments in the government recognize that seniors are more likely to be targeted by scammers as financial abuse of seniors is still an ongoing issue. Seniors and their family should be more alerted for the surge of fake emails, text messages, websites and social media attempts to steal personal information.
  • Scammers Targeting Individuals with Limited English Proficiency – Recent immigrants are targeted the most with IRS impersonators phone scams. Never engage with a scammer as the IRS will never call to threaten jail time, deportation or revocation of a driver’s license so these threats should be ignored.
  • Dishonest Return Preparers – Every filing season dishonest tax return preparers will pop up and take advantage of innocent taxpayers with many scam tactics, committing fraud, or talking taxpayers into doing illegal things they regret later. Taxpayers should select creditable tax return preparers to avoid this scam.
  • Offer in Compromise Mills – Taxpayers should be cautious of misleading tax debt resolution companies that will charge them pricey fees and issue applications for a program they are unlikely to qualify for. Taxpayers can use the IRSs free online Offer in Compromise Pre-Qualifier tool to see if they qualify.
  • Fake Payments and Repayment Demands – A con artist will file a tax return with stolen information, once the refund hits the taxpayers bank account they will pose as an IRS employee claiming that an error was made and needs the money returned immediately or penalties and interest will result. The taxpayer is told to buy specific gift cards to pay back the IRS. The IRS will never demand payment by a specific method.
  • Payroll and HR Scams – Business Email Compromise or Business Email Spoofing is a phishing tactic designed to steal W-2s and other tax information most are requests for wire transfers or payment of fake invoices.
  •  Ransomware – With the rise of cybercrime taxpayers and tax professionals should avoid downloading any attachments from possible phishing emails. If the malware is downloaded all data on the computers network will be inaccessible and the Cybercriminal will demand a payment. The use of multi-factor authentication features can protect from data thefts.

If you have any questions contact a Henry+Horne professional for more information.

Natalie Hunt