Stimulus Checks: IRS Warns Against 'Dirty Dozen' Scam Tactics

Phishing

Phishing is a common scam at any time of year, even without a pandemic. The scams involve fake emails and the IRS warns that scam artists are using phrases like "coronavirus," "stimulus" and "COVID-19." The IRS never initiates contact with taxpayers through emails, so any email claiming to be from the agency is going to be a scam. "Don't click on links claiming to be from the IRS. Be wary of emails and websites − they may be nothing more than scams to steal personal information," the IRS noted.

Fake Charities

Criminals often use natural disasters and other major newsmaking situations like the pandemic to scam people by creating fake charities. "Fraudulent schemes normally start with unsolicited contact by telephone, text, social media, e-mail or in-person using a variety of tactics," the IRS notes. "Bogus websites use names similar to legitimate charities to trick people to send money or provide personal financial information. They may even claim to be working for or on behalf of the IRS to help victims file casualty loss claims and get tax refunds." Americans can use the IRS' "Tax Exempt Organization Search" tool to find legitimate charities.

Threatening Impersonator Phone Calls

The IRS never threatens taxpayers, but scam artists still try to scare people into sending them payments. Scam calls often threaten people with arrests, deportation, and license revocation if the potential victim does not pay a tax bill. The IRS sees reports like these year-round. Any taxpayer who thinks they might have a problem with their taxes should contact the IRS.

Social Media Scams

The IRS is also seeing criminals reach out to people through social media, especially during the coronavirus pandemic. "Social media enables anyone to share information with anyone else on the Internet. Scammers use that information as ammunition for a wide variety of scams," the IRS noted. "These include emails where scammers impersonate someone's family, friends, or co-workers." Scammers might try to trick someone by sending them a link, which could contain malware. Scammers could also use a victim's emails and cell phone numbers to go after their friends and family.

EIP or Refund Theft

Criminals are now looking for ways to steal Americans' Economic Impact Payments (EIP) during the pandemic, using identity theft. They can also try to steal a victim's identity to steal a tax refund. The IRS set up a "Taxpayer Guide to Identity Theft" on IRS.gov, which provides taxpayers with steps on what to do if they believe they are a victim of identity theft. The "Coronavirus Tax Relief and Economic Impact Payments" page provides information on how to make sure you receive your stimulus check.

Senior Fraud and Speakers Targeting Non-English Speakers

Some scammers target seniors and non-English speakers, assuming they could be easier targets. The IRS notes that seniors are "more likely" to be targeted, especially those unfamiliar with the signs of scams in social media messages and emails. "Seniors need to be alert for a continuing surge of fake emails, text messages, websites, and social media attempts to steal personal information," the IRS said.

When it comes to non-English speakers, the main concern is scam phone calls. Those who are not familiar with English might mistake a robocall as a genuine message from the government. Recent immigrants might also be targeted by scammers threatening deportation. The IRS does not contact people over the phone and is not going to ask for personal information like an address or Social Security number.

Unscrupulous Return Preparers

The IRS warns that it is important to find tax professionals to help you prepare your taxes. Some dishonest preparers might try to scam a taxpayer and those who might not really have to file taxes at all. Unscrupulous preparers "promise inflated refunds by claiming fake tax credits, including education credits, the Earned Income Tax Credit (EITC) and others," the IRS notes. "Taxpayers should avoid preparers who ask them to sign a blank return, promise a big refund before looking at the taxpayer's records, or charge fees based on a percentage of the refund."

Taxpayers also need to avoid "ghost" preparers. According to the IRS, these preparers can "expose their clients to potentially serious filing mistakes as well as possible tax fraud and risk of losing their refunds" and do not sign the tax returns they prepare. It is even more important to look out for legitimate tax professionals during the coronavirus pandemic. The IRS has a list of tips for finding the best preparers at IRS.gov.

Offer in Compromise Mills

Next, the IRS is warning against "misleading tax debt resolution companies" who claim they can settle tax debts for "pennies on the dollar" through an Offer in Compromise (OIC). These are really only offered to taxpayers who can meet specific criteria to lower tax bills. However, some companies claim to try to sell the program to taxpayers who do not qualify so they can take a big fee from taxpayers already facing debt. "Taxpayers can apply for an OIC without third-party representation; but the IRS reminds taxpayers that if they need help, they should be cautious about whom they hire," the IRS points out.

Fake Payments with Repayment Demands

One new scam the IRS highlighted on its list involves a scam artist giving a victim a fake tax refund after they obtain a victim's Social Security number or Individual Taxpayer Identification Number (ITIN) and their bank information. The scammer then uses the data to file a tax return, so the victim will suddenly see a refund. Then, the scammer contacts the victim, claiming to be an IRS employee and tells the taxpayer there was an error. The scammer asks the victim to return the money by buying specific gift cards in the amount of the refund.

The IRS is never going to ask for payment this way. Taxpayers can pay taxes through different methods, but no real process is going to involve gift cards. "Anytime a taxpayer receives an unexpected refund and a call from us out of the blue demanding a refund repayment, they should reach out to their banking institution and to the IRS," the IRS notes.

Payroll and HR Scams

Taxpayers also have to be on the lookout for Business Email Compromise (BEC) and Business Email Spoofing (BES) scams, which scam artists use to get W-2 and other tax information. Two common versions of these scams during the pandemic involve gift cards and direct deposits. The gift card scam uses a compromised email to ask a business to buy gift cards. The direct deposit scam involves a fraudster using a victim's compromised email to impersonate a potential victim and asking a business to change the employee's direct deposit information. They would then reroute a refund to a mysterious account controlled by the scammer. The IRS has also seen scams where fake IRS documents are used to make a request appear official.

Ransomware

Ransomware is malware that infects a victim's computer by taking advantage of their technical and human weaknesses. Once the ransomware infects a computer, the software searches for and locks critical and sensitive information with its own encryption. Criminals might use a phishing email to infect a computer, including a link or attachment that would launch the ransomware. Some emails might ask a victim to support a fake charity. Others try to find system flaws so they do not need to rely on human error. The IRS and Security Summit partners have asked taxpayers and tax professionals to use a multi-factor authentification feature on tax preparation software to help avoid data thefts.