A few months ago, the Internal Revenue Service published an annual list of “Dirty Dozen” tax scams. It was shocking that the recent year statistics reflect that the Dirty Dozen was mainly devised to target taxpayers and was focused on aggressive and evolving schemes based on coronavirus tax relief, such as Economic Impact Payments (commonly called the tax stimulus payments).
The masterminds behind these malicious schemes consider taxpayers as their soft targets. The IRS is constantly issuing warnings and requesting taxpayers to be on their toes and ask others around them to stay vigilant. The most important thing is awareness among the taxpayers, so they don’t get trapped in any scams set up to exploit them financially or extract their financial data or personal information.
Table of Contents
- The most common Dirty Dozen Tax Scams
- How to Protect Yourself from Dirty Dozen Tax Scams?
- Summing Up
The most common Dirty Dozen Tax Scams
With reference to the latest press release issued from the ITS, here are the most common “Dirty Dozen” tax scams of the year:
1. Threatening impersonator phone calls
A common tactic is fake threatening phone calls from criminals claiming to be the IRS. Scammers try to instill fear and urgency in potential victims. In fact, the IRS never threatens taxpayers or surprises them with demands for immediate payment.
2. Phishing
Taxpayers should be aware of the possibility of fake emails and websites designed to steal private data. The IRS does not approach taxpayers by email regarding tax invoices, refunds, or financial impact payments. Never click on any link not sent from the official ID of the IRS. Be careful with emails and websites. It could be nothing more than a scam aimed at stealing your confidential data.
3. Fraud Charitable Campaigns
Criminals often take advantage of natural disasters and other situations like the previous COVID-19 pandemic to create unreal charities to steal from soft-hearted people who seek to help in times of need.
4. Social media scams
Social media fraud leads to tax-related identity theft. A fundamental element of social media scams is convincing potential victims that you are communicating with a trusted and close person via email, text message, or social media message.
5. Ransomware
Ransomware is malware that targets human and technological vulnerabilities in order to infect potential victims’ computers, networks, or servers. Malware is a type of intrusive software that users often download accidentally. When downloaded, it records your keystrokes and other activities.
6. Payroll and HR scams
Tax professionals, employers, and taxpayers should be aware of phishing attempts intended to extract W-2 forms and similar data. These scams are known as Business Email Compromise (BEC) or Business Email Spoofing (BES).
7. Unreal payments along with repayment demands
Criminals are always looking for unique tactics to trick taxpayers into trusting them, such as sending fake refunds to taxpayers’ real bank accounts.
8. Scams focused on the non-English speakers
Tax scammers target audiences with sparse English knowledge. Such scams are most threatening, and some target people who may receive financial impact payments by soliciting taxpayer personal and financial information.
9. Cons targeting senior citizens
Older adults are quite a vulnerable section of society to be targeted or bullied by scammers, especially by financial abuse. Anecdotal evidence from professional services shows that cheating by older people is significantly reduced when service providers know that trusted friends and family members are interested in their affairs.
10. EIP or refund related scam
The IRS has made significant advancements against refund scams and theft in recent years, but they remain a grave threat. This year, criminals turned their attention to stealing economic impact payments as mandated by the CARES (Coronavirus Aid, Relief and Economic Security) Act.
11. Claiming unethical offer in compromise mills
Taxpayers should beware of fraudulent debt forgiveness companies that exaggerate the possibility of paying a penny tax on the dollar through an OIC (Offer in Compromise). Such offers are intended for taxpayers who pass the legal criteria to qualify for them. However, some unscrupulous companies sell their programs to unskilled indebted candidates to exploit them financially.
12. Unethical tax return preparers
Choosing the right tax accountant is essential as they must be trusted with confidential taxpayer information. While most tax professionals are honest and provide quality service, dishonest preparers show up every filing season, affecting unaware taxpayers and scamming them. They persuade people to do illegal things that they later regret.
How to Protect Yourself from Dirty Dozen Tax Scams?
The IRS has introduced a special section on the website IRS.gov to increase taxpayer awareness regarding the dirty scams throughout the year. Some case studies and scams that happened in the year are mentioned there so that people can learn from the mistake of the mistakes of others.
Taxpayers must always keep in mind that they are solely responsible for each and every piece of information present on their date tax return, no matter if they have hired someone to file the return. A consumer must always hire a reputed and knowledgeable touch specialist to deal with tax returns to avoid errors.
The IRS has consistently requested taxpayers to refrain from conversations with suspected persons through web portals or telephones. The IRS also intends to release an analogous checklist of enforcement and compliance priorities at the end of the current year.
Summing Up
We are responsible fot our own tax returns. Hence, we must stay vigilant and spread awareness in the society. Some future sets of press releases from the IRS will focus on the unethical strategies and tactics businesses and individuals adopt to escape their tax liabilities.
