SCAMS BULLETIN Host Jay White is an inactive attorney in San Mateo County, California.
January 18, 2023
SPECIAL REPORT FROM US INTERNAL REVEUE SERVICE
DIRTY DOZEN SCAMS
The IRS unveils “Dirty Dozen” scams for 2020
The Internal Revenue Service announced its annual “Dirty Dozen” list of tax scams. Special emphasis is on aggressive and evolving schemes related to coronavirus tax relief, including Economic Impact Payments.
Taxpayers are encouraged to review the list in a special section on IRS.gov and be on the lookout for these scams throughout this year.
Here are this year’s “Dirty Dozen” scams:
*Phishing:
Taxpayers should be alert to potential fake emails or websites looking to steal personal information. Don’t click on links claiming to be from the IRS. They may be nothing more than scams to steal personal information. These phishing schemes are using keywords such as “coronavirus,” “COVID-19” and “Stimulus” in various ways.
*Fake Charities:
Criminals frequently exploit natural disasters and other situations such as the current COVID-19 pandemic by setting up fake charities to steal from well-intentioned persons.
*Threatening Impersonator Phone Calls:
IRS impersonation scams come in many forms. A common one is 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 him or her with a demand for immediate payment.
Phone scams or “vishing” (voice phishing) pose a major threat. Scam phone calls, including those threatening arrest, deportation or license revocation if the victim doesn’t pay a bogus tax bill. These calls often take the form of a “robocall” (a text-to-speech recorded message with instructions for returning the call).
*Social Media Scams:
Taxpayers need to protect themselves against social media scams, which frequently use events like COVID-19 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.
*EIP 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.
Taxpayers can consult the Coronavirus Tax Relief page of IRS.gov for assistance in receiving their EIPs. Anyone who believes they may be a victim of identity theft should consult the Taxpayer Guide to Identity Theft on IRS.gov.
*Senior Fraud:
Senior citizens and those around them need to be on alert for tax scams targeting older Americans. Seniors are more likely to be targeted and victimized by scammers than other segments of society. Financial abuse of seniors may occur among personal and professional relationships.
*Scams targeting non-English speakers:
IRS impersonators and other scammers target groups with limited English proficiency. These scams are often threatening in nature. Some scams target those potentially receiving an Economic Impact Payment requesting personal or financial information from the taxpayer.
Phone scams pose a major threat to people with limited access to information, including individuals not entirely comfortable with the English language. These con artists may have some of the taxpayer’s information, including their address, the last four digits of their Social Security number or other personal details – making the phone calls seem more legitimate.
A common scam remains the IRS impersonation scam where a taxpayer receives a threatening call threatening jail time, deportation or revocation of a driver’s license. Taxpayers who are recent immigrants often are the most vulnerable and should ignore these threats and not engage the scammers.
*Unscrupulous Return Preparers:
Selecting the right return preparer is important. They 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.
Unscrupulous preparers may also target those without a tax filing requirement and may or may not be due a refund. They promise inflated refunds by claiming fake tax credits. 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 are ultimately responsible for the accuracy of their tax return, regardless of who prepares it.
*Offer in Compromise Mills:
Taxpayers need to wary of misleading tax debt resolution companies that can exaggerate chances to settle tax debts for “pennies on the dollar” through a phony Offer in Compromise (OIC). Legitimate offers are available for taxpayers who meet specific criteria under law to qualify for reducing their tax bill. But, to collect a hefty fee from taxpayers, unscrupulous companies wrongly oversell the program to unqualified candidates.
These scams are commonly called OIC “mills,” which cast a wide net for taxpayers, charge them pricey fees. Although the legitimate OIC program www.ftc.gov/offer in compromise, helps thousands of taxpayers each year, not everyone qualifies for an OIC.
Individual taxpayers can use the free online Offer in Compromise Pre-Qualifier tool to see if they qualify. The simple tool allows taxpayers to confirm eligibility and provides an estimated offer amount. Taxpayers can apply for an OIC without third-party representation; but the IRS reminds taxpayers that if they need professional help, they should be cautious about whom they hire.
*Fake Payments with Repayment Demands:
Criminals are frequently finding new ways to trick taxpayers into believing their scam, including putting a bogus refund into the taxpayer’s actual bank account.
Here’s how the scam works:
A con artist steals or obtains a taxpayer’s personal data including Social Security number or Individual Taxpayer Identification Number (ITIN) 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 enters the taxpayer’s bank account, the fraudster places a call to them, posing as an IRS employee. The taxpayer is told 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.
The IRS will never demand payment by a specific method. There are many payment options available to taxpayers and there’s also a process through which taxpayers have the right to question the amount of tax the IRS says they owe. Anytime a taxpayer receives an unexpected refund and a call from us out of the blue demanding a refund repayment, they should immediately alert their banking institution and the IRS.
*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). This is particularly true with many businesses closed and their employees working from home due to COVID-19. Currently, two of the most common types of these scams are the gift card scam and the direct deposit scam.
In the gift card scam, a compromised email account is often used to send a request to purchase gift cards in various denominations. In the direct deposit scheme, the fraudster may have access to the victim’s email account (also known as an email account compromise or “EAC”). They may also impersonate the potential victim to have the organization change the employee’s direct deposit information to reroute their deposit to an account the fraudster controls.
BEC/BES scams have used a variety of ploys to include requests for wire transfers, payment of fake invoices as well as others. In recent years, the IRS has observed variations of these scams where fake IRS documents are used to lend legitimacy to the bogus request. For example, a fraudster may attempt a fake invoice scheme and use what appears to be a legitimate IRS document to help convince the victim.
The Direct Deposit and other BEC/BES variations should be forwarded to the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) where a complaint can be filed. The IRS requests that Form W-2 scams be reported to: phishing@irs.gov (Subject: W-2 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.
Victims generally are not aware of the attack until they try to access their data, or they receive a ransom request in the form of a pop-up window. These criminals don’t want to be traced so they frequently use anonymous messaging platforms and demand payment in virtual currency such as Bitcoin.
Cybercriminals might use a phishing email to trick a potential victim into opening a link or attachment containing the ransomware. These may include email solicitations to support a fake COVID-19 charity. Cybercriminals also look for system vulnerabilities where human error is not needed to deliver their malware.
The IRS and its Security Summit partners have advised tax professionals and taxpayers to use the free, multi-factor authentication feature being offered on tax preparation software products. Use of the multi-factor authentication feature is a free and easy way to protect clients and practitioners’ offices from data thefts. Tax software providers also offer free multi-factor authentication protections on their Do-It-Yourself products for taxpayers.
ATTRIBUTION: US Internal Revenue Service
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