New Tax Scams and Identity Theft Warnings – Did You Know?

The IRS recently posted warnings about new and ongoing tax scams, along with other fraudulent activity related to the COVID-19 (coronavirus) pandemic. The most prevalent and dangerous scams involve identity theft, deceptive advertising, and attempts to cheat taxpayers out of their refunds or economic impact payments (EIPs, also called stimulus payments).

– STEALING REFUNDS OR EIPS THROUGH IDENTITY THEFT: Some criminals steal a taxpayer’s Social Security number (SSN), and then file bogus forms with the IRS in order to receive tax refunds or other payments that rightly belong to the taxpayer.

– FAKE CHARITIES: Currently, a number of fraudulent charities with names very similar to legitimate organizations are calling taxpayers, claiming that they are collecting funds to help pandemic victims. Actual charities will provide their Employer Identification Numbers (EINs) upon request, so you can look them up and verify that the callers are who they say they are. Most real charities also offer secure online contribution portals.

– OFFER-IN-COMPROMISE (OIC) MILLS: You may have heard ads for agencies that can settle people’s IRS debts for “pennies on the dollar.” Some of these companies charge high fees to submit an OIC application to the IRS on a taxpayer’s behalf. Only about one in three OIC proposals are accepted by the IRS, but the companies do not refund fees for rejected applications. If you need help applying, work only with a reputable tax professional.

– FAKE PAYMENTS & REFUNDS WITH REPAYMENT DEMANDS: In this very complex scam, identity thieves first obtain a taxpayer’s SSN and bank account information, then file a fake IRS return and have the refund deposited into the taxpayer’s bank account. A scammer then calls the refund recipient and impersonates an IRS agent, claiming that the refund was issued by mistake and must be returned to the IRS. Often, these scammers demand the “repayment” in the form of gift cards. If you receive a mysterious payment from the IRS, especially if you then receive a phone call demanding repayment, contact your bank and the IRS immediately to report the potential scam.

Above all, remember to never share your SSN or any other personal information with anyone unless you are 100% sure who they are and why they need it. If in doubt, hang up or delete the email or text message, then contact the IRS directly to inquire about the issue.

 

Disclaimer: For informational purposes only. Does not constitute legal, financial, or other advice. Consult with a professional before taking any action.