Don’t fall for these ‘dirty dozen’ tax scams

Schemers and scammers are out in full force during the coronavirus pandemic. The IRS warns consumers to be aware!

The IRS’s annual “dirty dozen” list of tax scams emphasizes aggressive and evolving schemes related to coronavirus tax relief, including Economic Impact Payments. The criminals behind these bogus schemes view everyone as potentially easy prey. The IRS urges everyone to be on guard, look out for others in their lives, and refrain from engaging potential scammers online or on the phone.

Here are this year’s “dirty dozen” scams:

Phishing:

Taxpayers should be alert to potentially fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a tax bill, refund or Economic Impact Payment. 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.

Fake Charities:

Criminals frequently exploit natural disasters and other situations, such as COVID-19, by setting up fake charities to steal from well-intentioned people trying to help in times of need. Fake charity scams generally rise during times like this.

Threatening Impersonator Phone Calls:

IRS impersonation scams come in many forms. A common one remains bogus threatening phone calls from a criminal claiming to be with the IRS. The scammer attempts to instill fear and urgency in the potential victim. In fact, the IRS will never threaten a taxpayer or surprise them with a demand for immediate payment.

Social Media Scams:

Taxpayers need to protect themselves against social media scams, which frequently use events like COVID to try tricking people. 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. These include emails where scammers impersonate someone’s family, friends or co-workers.

Economic Impact Payment or Refund Theft:

The IRS has made great strides against refund fraud and theft in recent years, but they remain an ongoing threat. Criminals this year also turned their attention to stealing Economic Impact Payments as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Senior Fraud:

Senior citizens and those who care about them need to be on alert for tax scams targeting older Americans. The IRS recognizes the pervasiveness of fraud targeting older Americans along with the Department of Justice, FBI, Federal Trade Commission, Consumer Financial Protection Bureau (CFPB) and others.

Scams targeting non-English speakers:

IRS impersonators and other scammers also target groups with limited English proficiency. These scams are often threatening in nature. Some scams also target those potentially receiving an Economic Impact Payment and request personal or financial information from the taxpayer.

Unscrupulous Return Preparers:

Selecting the right return preparer is important. Preparers are entrusted with a taxpayer’s sensitive personal data. Most tax professionals provide honest, high-quality service, but dishonest preparers pop up every filing season committing fraud, harming innocent taxpayers or talking taxpayers into doing illegal things they regret later. More than just tax preparers, Certified Public Accountants (CPA) are held to high ethical standards and complete education each year to maintain their licenses in the Commonwealth.

Offer-in-Compromise Mills:

Taxpayers need to be wary of misleading tax debt resolution companies that can exaggerate chances to settle tax debts for “pennies on the dollar” through an Offer in Compromise (OIC). These offers are available for taxpayers who meet very specific criteria under law to qualify for reducing their tax bill. But unscrupulous companies oversell the program to unqualified candidates so they can collect a hefty fee from taxpayers already struggling with debt.

Fake Payments with Repayment Demands:

Criminals are always finding new ways to trick taxpayers into believing their scams, including putting a bogus refund into the taxpayer’s actual bank account. A con artist steals or obtains a taxpayer’s personal data including Social Security Number or Individual Taxpayer Identification Number and bank account information. The scammer files a bogus tax return and has the refund deposited into the taxpayer’s checking or savings account. Once the direct deposit hits the taxpayer’s bank account, the fraudster places a call to them, posing as an IRS employee. The taxpayer is told that there’s been an error and that the IRS needs the money returned immediately or penalties and interest will result. The taxpayer is told to buy specific gift cards for the amount of the refund.

Payroll and HR Scams:

Tax professionals, employers and taxpayers need to be on guard against phishing designed to steal Form W-2s and other tax information. These are Business Email Compromise (BEC) or Business Email Spoofing (BES). These scams are particularly pervasive with many businesses closed and their employees working from home. Currently, two of the most common types of these scams are the gift card scam and the direct deposit scam.

Ransomware:

This is a growing cybercrime. Ransomware is malware targeting human and technical weaknesses to infect a potential victim’s computer, network or server. Malware is a form of invasive software that is often frequently inadvertently downloaded by the user. Once downloaded, it tracks keystrokes and other computer activity. Once infected, ransomware looks for and locks critical or sensitive data with its own encryption. In some cases, entire computer networks can be adversely impacted.

The Virginia Society of Certified Public Accountants (VSCPA) is the leading professional association in the Commonwealth dedicated to empowering CPAs to thrive. Founded in 1909, the VSCPA has more than