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Tax scams

Variety is the spice of the IRS’s latest Dirty Dozen

ByJeff Stimpson
July 8, 2021 2:11 PM

The new IRS Dirty Dozen of tax scams and rip-offs covers a lot of ground. Some warnings are about familiar faces, such as ghost preparers who don’t sign returns, while other scams involve devices from simple robocalls to sophisticated financial arrangements.

And what a busy year to be a crook when it came to tax info! During 2020, almost 400 “vishing” or “voice phishing” scams were reported, for instance, up 14 percent from the prior year, and tax lien-related scams nearly doubled. (Reports of IRS impersonators on the phone, on the other hand, did decline.)

Here are 12 of last year’s dirtiest, according to the IRS.

Stealing stimulus payments

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Chip Somodevilla/Getty Images
ID thieves had a big year trying to steal Economic Impact Payments. As with the rich tapestry of other scams through the years, taxpayers should watch for text messages or random calls or emails inquiring about bank account information or requesting that recipients click a link or verify data.

Impersonating the unemployed

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The pandemic threw millions into joblessness, and scammers took advantage by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. A big tipoff for taken taxpayers: a 1099-G reporting compensation they didn’t receive. Unemployment fraud also often involved individuals acting with or against employers and financial institutions to swipe state and local assistance.

Phish tales

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Ivelin Radkov/Ivelin Radkov - Fotolia
Filing season remains a special time of year for phishing scams, targeting individuals with communications appearing to come from legitimate sources to net personal and financial data; scams also aimed to infect devices by convincing victims to download programs that silently mine data. Cybercriminals usually send these phishing communications by email, but may also use text or social media posts or messaging.

Aiming at tax pros

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Martin Poole/Getty Images
Tax professionals have reported receiving scam emails from the fictitious “IRS Tax E-Filing” phishing scams that purport to involve verification of EFINs and CAF numbers. The IRS has also seen an increase in offers to buy and sell EFINs and CAFs.

Clients as bait

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The “New Client” scam continues to be a phishing favorite targeting tax pros. For example, “I just moved here. I have an urgent tax issue and I was hoping you could help. I hope you are taking on new clients.” Coming in many variations, these emails might say one attachment is an IRS notice and the other is the prospective client’s prior-year tax return.

Making vishes come true

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Picasa/pathdoc - Fotolia
The IRS reports increased voice-related phishing, or “vishing,” particularly with scams related to federal tax liens. As you’d expect, these unexpected calls ask for personal financial information. (Experts recommend asking questions of the caller but not providing any personal information. Not to mention hanging up immediately.)

Just plain anti-social

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Social media enables the unscrupulous to lurk on accounts and extract personal info to use against victims. Emails often impersonate the victim’s family, friends or co-workers and hinge on events like the COVID pandemic. These rip-offs have also led to tax-related ID theft.

Ripped from the headlines

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santiago silver - Fotolia
Recent news is full of tales of ransomware, malware designed to block access to a computer system or data until the victim pays for release. Crooks might also threaten to publish sensitive files belonging to the victims. Attacks continue to rise across various sectors. (You’ve probably heard of Colonial Pipeline and software supplier Kaseya, for instance.)

Mining tragedy

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Scammers love fake nonprofit organizations — and the soil was fertile in the past year with tragedies, disasters and pandemic. Scams requesting donations for disaster relief efforts were especially common over the phone.

‘This is the IRS’

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Andy Dean/Andy Dean - Fotolia
IRS impersonators and other scammers are known to target and threaten groups with limited English proficiency, as well as senior citizens. Though it’s diminished recently, IRS impersonation remains common, where a taxpayer receives a call threatening jail, deportation, or revocation of a driver’s license from someone claiming to be with the agency.

OIC SOBs

IRS headquarters in Washington, D.C.
Andrew Harrer/Bloomberg
Offer in compromise mills contort the IRS program into something it’s not, misleading victims who have no chance of meeting real OIC requirements while charging sky-high fees.

Abusive arrangements

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Promoters peddle false hopes of large deductions from abusive arrangements, charging a fortune and offering phony claims of legitimacy. Arrangements include syndicated conservation easements twisted through the tax law; micro-captive structures lacking many attributes of insurance; scummy interpretation of the U.S.-Malta Income Tax Treaty; improper R&D credit claims; and abusive shelters of monetized installment sales.
Jeff Stimpson
Freelance writer
Tax scams Tax fraud IRS
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