The IRS compiles and shares a list of common tax scams each year. This year, with the COVID-19 pandemic complicating tax matters in numerous ways, scammers are becoming more aggressive and sophisticated in their methods. Here are some of the scams you should look out for in 2020.
Phishing is a practice that’s been used by tax scammers for years. It starts when you receive an email or link to a website that seems to be coming from a reputable organization (like a utility company, bank, tax software provider or government agency). But these emails or websites are actually bogus, and when you click them, they can instal malware on your device. From there, scammers can gain access to personal information — such as your Social Security number or bank account numbers.
This year however, the IRS has seen a massive uptick in phishing scams using terms like “Coronavirus” and “Stimulus”. Because of the uncertainty around COVID-19, as well as the precarious financial situation in which it has put many people, these are more likely to be clicked.
The IRS warns that it will never initiate contact with taxpayers via email about a tax bill, a refund or an economic impact payment. So if you see an email about this, be careful.
Criminals frequently exploit natural disasters and other tragedies by setting up fake charities. The COVID-19 pandemic is no different, as many fake charities have been discovered trying to exploit people’s good intentions for personal gain. Fraudulent charities often use names similar to those of legitimate organizations. They may even claim to be working for or on behalf of the IRS to help victims file casualty loss claims and get tax refunds. Always be suspicious of charities with names that sound like those of well-known organizations.
Seniors are more likely to be targeted and victimized by scammers. In recent years, thousands of senior people have lost millions of dollars to tax scams and fake IRS communications. Now, with older Americans using Facebook and other social media platforms with increasing frequency, scammers have even more ways to engage with — and swindle — unsuspecting seniors.
Social Media Scams
Seniors aren’t the only ones who get scammed through social media. In fact, people of all ages and levels of tech-savvy have fallen victim to these kinds of scams. As COVID-19 has forced us to communicate online and through social media, scammers are getting more and more personal information to engage in a wide variety of scams.
To protect yourself, the IRS generally recommends not posting too much information about yourself and your family. An identity thief can find this information about your life and then use it to answer “challenge” questions on your accounts — or to access your money and personal information.
EIP or Refund Theft
Refund theft has been on the IRS’s tax scam list for years. But in addition to stealing tax refunds, criminals have turned their attention to stealing economic impact payments (EIPs) provided under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Criminals may also use stolen information to file false tax returns or supply other bogus information to the IRS to divert refunds to wrong addresses or bank accounts.
The IRS urges taxpayers to be aware of these scams and not to engage with potential scammers online or on the phone. If you’re unsure whether a communication you’ve received is actually from the organization it claims to be, contact that organization directly using their official phone number or email. Don’t respond or engage with the suspicious communication.