IRS Announces Dirty Dozen Tax Scams for 2021July 13, 2021
Taxpayers…you’ll want to read up on the latest ‘dirty dozen tax scams.’ This year’s dirty dozen is separated into multiple categories including pandemic related scams, personal information cons and more. Here are the details.
The Internal Revenue Service’s (IRS) “Dirty Dozen Tax Scams” has just been updated for 2021 and you’ll want to pay attention to some new scams that relate specifically to recent events. This year’s scams are separated into four categories: pandemic related scams, personal information scams, ruses focused on unsuspecting victims and schemes that persuade taxpayers into unscrupulous actions. Let’s dive in.
2021 Dirty Dozen
Pandemic Related Scams
- Economic Impact Payment Theft- While most people eligible for economic impact payments (EIPs) or stimulus payments will receive them automatically from the IRS, there are identity thieves who will try to steal them. Be wary of text messages, phone calls, or emails requesting you to supply bank account information, click a link, or verify data. The IRS will never initiate contact via phone, email, text or social media to request info related to EIPs.
- Unemployment Fraud Leading to Inaccurate Taxpayer 1099-Gs- Due to increased unemployment compensation amid the COVID pandemic, scammers are taking advantage by filing fraudulent unemployment compensation claims using stolen personal information for people who have not filed claims. If you receive a form 1099-G for unemployment compensation that you did not receive, contact your appropriate state agency for a corrected form.
- Phishing- Phishing once again makes the “dirty dozen” for 2021. Never click on an email claiming to be from the IRS! The IRS will never initiate contact with you via email regarding a bill, EIP or tax refund. These phony emails are nothing more than scams to steal your personal information.
Personal Information Scams
- Social Media Scams- Events like COVID-19 allow fraudsters to trick people into sharing information. Bear in mind that because social media enables anyone to share information with anyone else on the Internet, there is a chance that scammers will gain access to that information and use it for a variety of scams. Watch out for messages on Facebook (including those that appear to be coming from a close friend or family member) that include suspicious links…if it seems fishy, it probably is! Review your privacy settings to make sure that you are not sharing sensitive information through your social media channels.
- Impersonator Phone Calls/Vishing- Did you receive a threatening phone call from the “IRS” asking you to pay an overdue tax bill through a wire transfer or prepaid debit card? This is a scam! The IRS will never call you without first sending a bill through the mail. They will also never request an immediate payment without allowing you to question it, require that you pay in a certain manner, and of course they would never threaten you with arrest, deportation, etc.
- Ransomware- Still be on the lookout for ransomware! Ransomware targets human and technical weaknesses to infect a potential victim’s computer, network or server. Don’t click on suspicious links or email attachments.
Ruses focused on unsuspecting victims
- Fake Charities- Be wary of charities with names similar to nationally known organizations—they could be phony! Take a minute to ensure that you’re donating to a legitimate charity. IRS.gov has a search feature, Exempt Organizations Select Check that allows you to find legitimate, qualified charities to which donations may be tax-deductible. Scammers will often exploit national disasters and pandemics by setting up fake charities to steal your information.
- Immigrant/Senior Fraud- Scammers will target groups with limited English proficiency with scams that are often threatening in nature. If you receive a phone call threatening jail time, deportation or revocation of a driver’s license, it is probably a scam. The IRS has added new features to help -the Schedule LEP PDF allows a taxpayer to select in which language they wish to communicate. It’s no secret that elderly individuals are also a prime target for cyber scams. The IRS is warning senior citizens and those who care for them to be on alert for tax scams targeting older Americans. With older people becoming more comfortable using technology especially social media, this gives scammers another means of taking advantage.
- Offer in Compromise “Mills”- Taxpayers will also want to be wary of misleading tax debt resolution companies that can settle tax debts for “pennies on the dollar” through an “Offer in Compromise” or OIC. These offer taxpayers the chance to reduce their tax bill if they meet certain, very specific criteria. Unscrupulous companies will oversell the program to unqualified candidates so they can collect a fee from taxpayers who are already in debt. Known as “OIC mills,” these scams cast a wide net for taxpayers, charge pricey fees and churn out applications for a program they are unlikely to be eligible for.
Schemes that persuade taxpayers into unscrupulous actions
- Unscrupulous Tax Return Preparers- Make sure you take time to select the right return preparer. Dishonest preparers appear every filing season committing fraud and talking people into doing illegal things. Pay special mind to so called “ghost” preparers who digitally file returns and don’t sign the tax returns they prepare. Anyone who is paid to prepare returns must have a Preparer Tax Identification Number (PTIN) that they must include on the returns they prepare.
- Unemployment Insurance Fraud- These scams involve individuals attempting to get state and local assistance to which they are not entitled to receive—the IRS warns states, employers and financial institutions to be aware of these scams- identity related fraud, employer-employee collusion fraud, misrepresentation of income fraud, fictitious employer-employee fraud and insider fraud. Be cautious if you receive unemployment payments from a state other than where you reside or have worked, if you receive multiple state employment payments within the same disbursement timeframe and if payments are made in the name of someone other than the account holder.
- Promoted Abusive Arrangements- Be on the lookout for “tax promoters” who promise large tax deductions through abusive arrangements. The IRS has recently created the Office of Promoter Investigations (OPI) which focuses on participants an d the promoters of abusive tax avoidance transactions.
Need help determining if something is real or phony? We can help. Reach out to our Information Security Services Team.