The Internal Revenue Service, better known as the IRS, has created its yearly “Dirty Dozen” list. This annual list serves as a warning for taxpayers, tax professionals, and businesses to be aware of the most common nefarious conspiracies and scams.
However, this year the IRS made some adjustments to the “Dirty Dozen.” They chose to separate the list into four categories:
Tax Scams: Pandemic-related Scams
The chaos of novel coronavirus has created new opportunities for scammers to take advantage of unsuspecting victims. Two of the most prominent scams in this category are:
Economic Impact Payment theft
Criminals have been seeking ways to steal stimulus payments, also known as Economic Impact Payments (EIPs). It is important to note that most eligible people will automatically receive their payments directly from the IRS.
The following are tell-tale signs of a scam:
- Any random text messages, phone calls, or emails inquiring about bank account information or containing any links with instructions urging the recipient to click and “verify data” should be deleted without opening.
- Mailbox theft is another thing to be aware of– report any suspected mail losses to Postal Inspectors.
- The IRS will not contact people by phone, email, text, or social media asking for any personal information, such as Social Security numbers or financial data relating to stimulus payments.
Unemployment Fraud involving Inaccurate 1099-Gs
The COVID-19 pandemic caused record numbers of taxpayers to lose their jobs and seek unemployment benefits from their respective states. Unfortunately, scammers took advantage of this by filing fraudulent unemployment claims using the stolen personal information of taxpayers that did not file unemployment claims of their own. Identity thieves received these payments.
The IRS urges taxpayers to keep surveillance of receiving a Form 1099-G reporting unemployment compensation they did not personally receive. If you find yourself in this situation, you are advised to contact your state unemployment agency for a correct form and further assistance.
Tax Scams: Personal Information Cons
The most common scams seeking to dupe victims into revealing private information or transferring funds include:
Fake emails, texts, websites, social media, and such are tools used by fraudsters in an attempt to gain vulnerable information.
Impersonator phone calls
This scam is also known as “vishing.” It uses a more personal phone call trickery.
Do not open emails, social media messages, or click on links that are from suspicious senders. Clicking on the wrong link can cause significant damage to any business, even large corporations.
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- Ruses Focusing on Unsuspecting Victims, and Actions
This category of scams focuses on unsuspecting victims, one of which includes:
There has been a surge in fake organizations looking to take advantage of the goodwill and generosity of others.
Before donating, be sure to access the charity’s exact name, their web address and seek out more information to assure that they are a reputable organization.
Tax Scams: Schemes that Persuade Taxpayers into Unscrupulous Actions
Unsuspecting victims are not the only prey of fraudsters; well-trained financial teams can also be targeted by malicious schemes as well – some of these schemes include:
Unscrupulous Tax Return Preparer
Be wary of preparers with questionable practices, such as not properly signing tax returns or requiring cash payments without receipts.
The solution to avoiding such scams, your team will need to be vigilant and report any suspicious activity to prevent any damage from occurring.