In 2021, the Internal Revenue Service (IRS) published information about nefarious schemes and tax scams that have affected many taxpayers. Although the IRS continually updates its technology to prevent these crimes, cyber con artists win more often than we’d like.
At SST, our goal is to educate clients so they can more easily detect cyber criminals and not become victims of their fraudulent activities.
Below are four categories of current scams that the IRS believes are affecting taxpayers:
- Economic impact theft
- Impersonator phone calls/vishing
- Fake charities
- Offer in compromise mills
Economic Impact Payment Theft
Identity theft continues to be a threat to all of us. Since the pandemic began, a major target has taxpayers’ Economic Impact Payments (EIPs), also known as stimulus payments. Should more EIPs be issued in 2022, eligible participants will receive payments automatically from the IRS. That being said, taxpayers should watch out for these tell-tale signs of a scam:
- Any text messages, random incoming phone calls, or emails inquiring about recipients’ bank account information or requesting recipients to click a link or verify data
- Delete these without opening them
- If you do open them, DO NOT click on any links within the message
- Suspected mailbox theft
- Frequently check mail and report suspected mail theft to USPS postal inspectors
- Any communications requesting personal information related to issuance of EIPs
- The IRS will never initiate contact by phone, email, text message, or social media asking for your Social Security number or other personal/financial information
Taxpayers should remember that the IRS website is the agency’s only official channel for information on payments, refunds, and other tax information. Please refer to this website for any questions or call the IRS at 1-800-829-1040.
Impersonator phone calls/vishing
Individuals should be wary of unexpected phone calls asking for personal financial information. The IRS has seen an increase in voice-related phishing, or ‘vishing,’ particularly with scams related to federal tax liens. For those receiving phone calls out of the blue, security experts recommend asking questions of the caller but NOT providing any personal information. If in doubt, hang up immediately.
During 2020, almost 400 vishing scams were reported, a 14% increase compared to 2019. Of those vishing scams, 25% were scammers who tried to use fake tax lien information. The total number of tax lien-related scams increased from 58 in 2019 to 104 in 2020, an increase of 79%. The IRS urges taxpayers to refrain from engaging potential scammers on the phone or online.
While both the IRS and the Federal Trade Commission (FTC) have seen a decline in the number of reports of scammers contacting potential victims and posing as the IRS, the agency urges taxpayers to still be alert. The IRS has seen a 43% decrease in the number of reports of calls from callers claiming to be from the IRS: 20,500 in 2020 compared to 36,000 in 2019. The FTC also saw a 67% decline, with 7,694 reports in 2019 down to 2,571 in 2020.
To help you quickly identify a scam, it’s important to know the following facts about the IRS:
- The IRS generally initiates contact via mail – not phone – about unpaid taxes.
- The IRS may attempt to reach individuals by telephone after several attempts but will not insist on payment using an iTunes card, gift card, prepaid debit card, money order, or wire transfer.
- The IRS will never request personal or financial information by e-mail, text, or social media.
Recipients of these calls should hang up and never give out any personal information. If anyone receives an unexpected call that they believe to be a scammer posing as the IRS, they are encouraged to report it to the Treasury Inspector General for Tax Administration (TIGTA).
The IRS advises taxpayers to be on the lookout for scammers who set up fake organizations to take advantage of the public’s generosity. They especially take advantage of tragedies and disasters, such as the COVID-19 pandemic.
Scams requesting donations for disaster relief efforts are especially common over the phone. Taxpayers thoroughly research a charity before they donate and not feel pressured to give immediately.
Taxpayers who give money or goods to a charity may be able to claim a deduction on their federal tax return, but only if said charity has been qualified by the IRS. To check the status of a charity, use the IRS’ Tax Exempt Organization Search Tool. (It’s also important for taxpayers to remember that they can’t deduct gifts to individuals or to political organizations and candidates.)
Here are some tips to remember about fake charity scams:
- Individuals should never let any caller pressure them. A legitimate charity will be happy to receive a donation at any time, so there should be no rush. Donors are encouraged to take time to conduct independent research.
- Potential donors should ask the fundraiser for the charity’s exact name, web address, and mailing address, so it can be confirmed later. Some scammers pretending to be telemarketers will use names that sound like large, well-known charities to confuse people.
- Be careful of how a donation is paid. Donors should not work with charities that ask them to pay using gift cards or wire transfers, as it’s likely a sign of a scam. It’s safest to pay by credit card or check once you’re able to verify the organization’s legitimacy.
For more information about fake charities, visit the Federal Trade Commission’s website.
Offer in Compromise “Mills”
Offer in Compromise (OIC) mills contort the eponymous IRS program into something it’s not, misleading people with no chance of meeting the program’s eligibility requirements while charging excessive fees, often thousands of dollars.
An OIC is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax debt. The IRS has the authority to settle, or “compromise,” federal tax liabilities by accepting less than full payment under certain circumstances. However, some scammers inappropriately advise indebted taxpayers to file an OIC application with the IRS, even though the scammers know the person won’t qualify. This costs honest taxpayers money and time.
“We’re increasingly concerned that people having trouble paying their taxes are being duped into misleading claims about settling their tax debts for ‘pennies on the dollar,’” said IRS Commissioner Chuck Rettig. “The IRS urges people to take a few minutes to review information on IRS.gov to see if they might be a good candidate for the program – and avoiding costly promoters who advertise on radio and television.”
Taxpayers should be especially wary of scammers who claim they can obtain larger settlements than others, or who claim that the IRS will accept a settlement offer for a small percentage. Companies advertising on TV or radio likely can’t do anything for taxpayers that the taxpayers can’t do themselves by contacting the IRS directly.
Taxpayers can go to IRS.gov and review the Offer in Compromise Pre-Qualifier Tool to see if they qualify for an OIC. The IRS reminds taxpayers that under the First Time Abate policy, they can go directly to the IRS for administrative relief from a penalty that would otherwise be added to their tax debt.