13 Aug Tax Scams Targeting Innocent Taxpayers
The 2020 tax deadline extension afforded scammers more opportunity to target innocent taxpayers. The IRS compiles a list every year, but this year it includes evolving schemes related to coronavirus tax relief. The criminals view everyone as easy prey, especially vulnerable populations such as the elderly. You should refrain from engaging scammers online or on the phone. Here are some examples:
Fake Charities
Scammer like to exploit natural disasters (like the COVID-19 pandemic) by setting up fake charities to steal from well-intentioned people trying to help in times of need.
Schemes generally start with unsolicited contact (random text message or social media chat). Bogus websites use names similar to legitimate charities asking people to send money or provide personal information. Some claim to be working for or on behalf of the IRS to help victims file loss claims and get tax refunds.
Legitimate charities will provide their Employer Identification Number (EIN) if requested, which can be used to verify their legitimacy using the search tool on IRS.gov.
Economic Impact Payment or Refund Theft
Due to the pandemic, criminals seized Economic Impact Payments. This was due to identity theft from false tax returns or other bogus information where the IRS sent refunds to wrong addresses or bank accounts.
Seniors are frequently targeted and victimized by scammers. Financial abuse of seniors is a problem among personal professional relationships but less frequent when a trusted family member is keeping an eye out and takes an active interest in the senior’s affairs.
Victims of these scams are mainly residents of nursing homes and other care facilities where some people or facilities were suspected of taking advantage of vulnerable populations.
As older Americans have access to newer technologies, scammers use phishing scams. Family should teach their older family members about fake emails, websites, and social media attempts to steal personal information.
Phantom Tax Return Preparers
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.
Taxpayers should take particular care in selecting a credible tax preparer. The fake preparers usually don’t sign the tax returns they prepare. They may print the tax return and tell the taxpayer to sign and mail it to the IRS. If its e-filed, the preparer will not digitally sign as the paid preparer. By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on returns. Avoid preparers who ask you 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.
Offer in Compromise (OIC) Mills
An OIC is a helpful, legitimate way to quickly resolve back unpaid taxes, and can ease a lot of worry and anxiety for those with tax problems. But be wary tax debt resolution companies that exaggerate claims they settle for “pennies on the dollar”. This resolution applies to a very small population of taxpayers who meet specific criteria.
These OIC “mills” advertise widely, charge them pricey fees and pitch programs you’re unlikely to qualify for. In Fiscal Year 2019, the IRS only accepted 18,000 OICs.
Fake Payments with Repayment Demands
The IRS will never demand payment by a specific method. There are many payment options available and the taxpayer has the right to question the amount of tax owed. Anytime you receive an unexpected refund and a call out of the blue demanding repayment, reach out to your bank and the IRS.
If you think you’ve been a victim of a tax scam, please contact us immediately.
