2020 “Dirty Dozen” - IRS Scams
the "dirty dozen" tax scams
2020: Tax Scams in the COVID-19 Era

Each year, the Internal Revenue Service compiles a list of what represents the worst of the worst when it comes to tax-related scams - aptly named the “Dirty Dozen”. While it’s possible to encounter the schemes discussed at any time, their frequency tends to peak during tax season when individuals are clamoring to file as soon as possible and thus the risk of getting swindled is much higher. In the case of the 2020 Tax Season, we have had the fear and panic surrounding the COVID-19 pandemic adding even more distraction to the mix, giving scammers a wider window of opportunity to take advantage of a nation in crisis.

The ALG Group is here to elevate the awareness of our customers in order to keep yourself protected against becoming a victim of unrelenting criminal activity, especially during a time of such confusion and uncertainty. Below you will find a wealth of helpful information on each of the “Dirty Dozen” scams including what they are, how to spot them, and potential action to take when confronted.

“Phishing” is a common method that scammers use to trick taxpayers into giving up personal information like financial account numbers and passwords through fraudulent emails, text messages, phone calls and social media claiming to be from the IRS.In the era of COVID-19, these kinds of schemes are largely tied to tax refunds and Economic Impact Payments (EIP). They also actively exploit the fear and uncertainty related to the pandemic.

The IRS will NEVER initiate contact with you by email, text message, phone or social media to request personal or financial information. How do you spot a phishing scam? They might use the following tactics:

  • Make frequent, emphasized use of the words “stimulus check” or“stimulus payment”. The official term is “economic impact payment”.
  • Ask you to sign over your EIP check to them.
  • Ask you to verify personal and/or financial information by phone, email, text or social media claiming that it is needed to speed up delivery of your EIP or tax refund.
  • Suggest that they can get your tax refund or EIP delivered faster by working on your behalf.

Scammers will frequently use a large scale crisis like the coronavirus pandemic to set up fake charities in order to steal from well-intentioned people. Using a tax deduction as bait, they’ll lure you into making a generous donation to their own bank account via unsolicited contact by phone, text message, social media or email - ultimately leaving you holding the bag.

The threat of being taken for a ride shouldn’t prevent you from wanting to help others in times of need, but it’s important to smart about it. If requested, legitimate charities will provide their Employer Identification Number (EIN)that can be verified through the Tax Exempt Organization Search on the IRS website.

  • Make frequent, emphasized use of the words “stimulus check” or“stimulus payment”. The official term is “economic impact payment”.
  • Ask you to sign over your EIP check to them.
  • Ask you to verify personal and/or financial information by phone, email, text or social media claiming that it is needed to speed up delivery of your EIP or tax refund.
  • Suggest that they can get your tax refund or EIP delivered faster by working on your behalf.

Criminals will pose as IRS agents over the phone using highly aggressive tactics in an attempt to get taxpayers to give up money or personal information. The real IRS will NEVER do any of the following:

  • Call unexpectedly and demand immediate payment via a specific method such as a wire transfer, prepaid debit card, or gift card. If you do owe taxes, the IRS will generally send you a bill in the mail first.
  • Threaten to involve local police or other law enforcement to have you arrested for not paying.
  • Demand that you pay without giving you a chance to appeal or question the amount owed.
  • Call out of the blue regarding an unexpected tax refund.

Most social media platforms require you to associate your account with a phone number or email address. Scammers can get ahold of this information and use it as ammunition of a variety of schemes including impersonating your friends, family and coworkers online in an attempt to trick you into giving up personal information. Some even try to impersonate the IRS or closely related entities, which has led to tax-related identity theft.

While the IRS has made great progress against tax refund fraud and theft in recent years, the threat remains. This year, criminals have also begun targeting the Economic Impact Payments (EIP) provided by the CARES Act in response to the COVID-19 crisis. This is mostly attributed to identity theft resulting in falsely filed tax returns or fraudulent information submitted to the IRS intended to divert refunds and EIPs to the wrong addresses or bank accounts.

If you have a loved one in a nursing home or other caregiving facility, it is important to note that EIPs belong to the recipient and not the organization providing care. The IRS has stated that these payments DO NOT count as a resource or income in determining Medicaid eligibility or other federal programs.

Senior citizens are more likely to be targeted and victimized by scammers than any other demographic in the United States - whether by a stranger or unfortunately even by someone they know and trust. In the case of professional relationships, there is anecdotal evidence that shows a substantial decrease in senior fraud when the service provider is aware that a friend or family member is actively interested in the senior’s affairs.

As seniors continue to become more comfortable with evolving technologies like social media, their generally lesser experience with it compared to younger generations also presents an additional risk for them to betaken advantage of by scammers. If you have an elderly loved one, be sure to educate them on phishing scams and the appropriate action to take when confronted with one.

IRS impersonator phone scams pose a particular threat to those with limited access to information, including individuals with limitedEnglish-proficiency. They most frequently take the form of “robocalls” -recorded text-to-speech messages that are designed to trip up someone whose first language is not English, but also may be an actual person trained to do the same thing.

The content of these phone calls may already include some of your information such as your address or last four digits of your Social SecurityNumber - in an attempt to make them seem more legitimate. They will also commonly threaten jail time, deportation or revocation of your driver’s license as consequences for not paying immediately. Recent immigrants to the UnitedStates should not engage with these scammers and hang up the phone immediately.

While most professional tax preparers like the ALG Group provide honest, high-quality service, there are a number of fraudulent ones that pop up every season to harm innocent taxpayers or talk them into doing illegal things that they’re completely unaware are against the law. Many legitimate tax professionals have been impacted by COVID-19 and their offices potentially closed as result, leaving scammers plenty of opportunity to take advantage of their clients.

Unscrupulous tax preparers may do the following:

  • Target those without a filing requirement who may or may not be due a refund.
  • Ask you to sign a blank tax return.
  • Promise inflated returns by claiming fraudulent tax credits including education, the Earned Income Tax Credit (ETIC)and more.
  • Promise a huge refund before even looking at your taxpayer records.
  • Charge additional fees based on a percentage of your refund.

You should also avoid so-called “ghost” preparers who potentially expose their clients to serious filing mistakes in addition to possible tax fraud and risk of refund loss. Tell-tale signs of a ghost preparer include:

  • Not signing the tax returns they prepare. Fore-filed returns, they will prepare but not digitally sign as the paid preparer.
  • Printing the tax return and instructing the client to sign and mail it to the IRS.
  • Not having a Preparer Tax IdentificationNumber (PTIN). All tax preparers are required by law to have one and must include it on the return when they sign it.

The ALG Group is a nationally recognized organization with a specialty focus on tax resolution. However, there are a number of unscrupulous companies that utilize purposefully misleading tactics and exaggerate your chances to settle tax debts for “pennies on the dollar” using a legitimate IRS program called Offer in Compromise (OIC).

Although the OIC program helps thousands of people a year lower their tax debt, not everyone qualifies. This is who these companies, known as“OIC” mills, target. They cast a wide net for clients who are likely already struggling with tax debt, charge them hefty fees and churn out OIC applications the company probably knows the client doesn’t qualify for in the first place.

If you’re in need of tax debt resolution, don’t take a risk on shady companies like those described above. Give us a call at (855) 648-2943 to learn about the ways we can help.

Scammers are constantly developing new ways to trick you into believing their schemes, such as depositing a bogus tax refund into your bank account then demanding you pay it back. Here’s how it actually works:

  • The scammer gets ahold of personal data including your SocialSecurity Number or Individual Taxpayer Identification Number and bank account information.
  • They file a fraudulent tax return and have the refund deposited into your checking or savings account.
  • Once the funds appear, the scammer places a call to you posing as an IRS agent, telling you that there’s been an error and that they need the deposited funds returned immediately or else penalties and interest will incur.
  • You’re then instructed to buy specific gift cards for the amount of the refund.

The IRS will NEVER demand payment from you via a specific method, nor will they deny you the right to question or appeal a tax bill you’ve received. If you receive a phone call like the one described above, we recommend that you get in touch with your banking institution as well as theIRS.

Tax professionals, employers and taxpayers should all be aware of phishing scams designed to steal W2 forms and other such tax documentation -known as Business Email Compromise (BEC) and Business Email Spoofing (BES).This is especially prevalent during the COVID-19 pandemic, when many businesses are closed or have employees working from home. Currently, these scams come in two common flavors:

  • Gift Card - Your compromised email address is used to send a request to purchase gift cards in various denominations.
  • Direct Deposit - The scammer impersonates you via email and requests that your employer or payroll servicer changes your direct deposit information to reroute your paycheck into an account they control.

BEC/BES scams have also included requests for wire transfers, payment of fraudulent invoices and more. In other cases, fake IRS documents are used in an attempt to lend legitimacy to the bogus requests.

Ransomware is a quickly emerging genre of cybercrime which involves the use of malware that targets human and technical weaknesses to infect devices, networks and servers - essentially holding any stored data hostage until you meet the criminals demands. To add insult to injury, this vicious software is most often inadvertently downloaded by the user via clicking links supplied in suspicious emails and text messages.

You might not be aware of the attack until you try to access your data or receive a ransom request in the form of a pop-up window. To avoid tracing bylaw enforcement, the perpetrators will likely use anonymous messaging platforms and demand payment in the form of virtual currency such as Bitcoin.

The ALG Group Is Here for You

Whether during tax season or not, you can always count on our team of professionals to have your back. If you have any questions regarding the“Dirty Dozen” scams discussed on this page, believe you have been a victim of one and are seeking next steps advice, or anything else - please do not hesitate to give us a call at (855)-648-2943.