Americans urged to beware of tax scams during pandemic
ir-2021-135, June 28, 2021
Washington – The Internal Revenue Service kicked off its 2021 “Dirty Dozen” list today with a warning for taxpayers, tax professionals, and financial institutions to be on the lookout for these 12 infamous schemes and scams.
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This year’s “dirty dozen” will be divided into four different categories:
- Pandemic-related scams such as Economic Impact Payment theft;
- personal information scams including phishing, ransomware, and telephone vishing;
- Tricks that target unsuspecting victims such as fake charities and senior/immigrant scams; and
- schemes that persuade taxpayers to take unscrupulous actions such as bids on compromise mills and syndicated conservation easements.
The agency compiled the list into these categories based on who perpetuates the schemes and who they impact. In addition to today’s scams, the IRS will be highlighting the other scams for the next three days.
The IRS urges all taxpayers to be on their guard, especially during the pandemic, not only for themselves, but for others in their lives.
“We continue to see scammers use the pandemic to steal money and information from honest taxpayers in times of crisis,” said IRS Commissioner Chuck Rettig. “We provide this list to alert taxpayers to common scams that scammers use against their victims. At the IRS, we are dedicated to stopping these criminals, but it’s up to all of us to remain vigilant to protect ourselves and our families.”
Taxpayers are encouraged to review the “dirty dozen: list” in a special section on irs.gov and should be on the lookout for these scams during filing season and throughout the year.
economic impact payment theft
An ongoing threat to people comes from identity thieves trying to steal Economic Impact Payments (EIPs), also known as stimulus payments. Most eligible people will automatically receive their payments from the IRS. Taxpayers should watch for these telltale signs of a scam:
- Any text messages, random incoming phone calls, or emails that ask for bank account information or ask recipients to click a link or verify details should be considered suspicious and removed without opening.
- Be alert to mailbox theft. check the mail often and report suspected mail losses to postal inspectors.
- don’t fall for stimulus check scams. The IRS will not initiate contact by phone, email, text, or social media requesting Social Security numbers or other personal or financial information related to Economic Impact Payments.
Taxpayers should remember that the IRS website, irs.gov, is the agency’s official website for payment, refund, and other tax information.
unemployment fraud leading to an inaccurate 1099-gs filer
Due to the covid-19 pandemic, many taxpayers lost their jobs and received unemployment compensation from their state. however, scammers also took advantage of the pandemic by filing fraudulent unemployment compensation claims using personal information stolen from people who had not filed claims. payments made on these fraudulent claims went to identity thieves.
The IRS reminds taxpayers to be on the lookout for a 1099-G form reporting unemployment compensation they did not receive. For people in this situation, the IRS encourages them to contact the appropriate state agency for a corrected form. If a corrected form cannot be obtained so that a taxpayer can file a tax return on time, taxpayers should complete their return claiming only the unemployment compensation and other income actually received. see identity theft and unemployment benefits for tax details and dol.gov/fraud for state-by-state reporting information.
additional protection to help protect taxpayers
irs makes ip pins available to all taxpayers, adding another layer of security
To help taxpayers avoid identity theft, this year the IRS made its Identity Protection PIN (IP PIN) program available to all taxpayers. previously it was only available to victims of identity theft or taxpayers in certain states. The IP PIN is a six-digit code known only to the taxpayer and the IRS. helps prevent identity thieves from filing fraudulent tax returns using a taxpayer’s personally identifiable information.
Using an ip pin is essentially a way to block a tax account. the ip pin serves as a key to open that account. Electronic returns that do not contain the correct ip pin will be rejected and paper returns will go through additional scrutiny for fraud.
fraud reduction
the irs and its security summit partners in the states and the private sector tax community have made changes to help reduce identity theft-related refund fraud that are noticeable to the average person who files a statement:
- tax software providers have agreed to strengthen password protocols. this is the first line of defense for these companies to make sure their products are safe.
- State tax agencies began asking for taxpayers’ driver’s license numbers as another way for people to prove your identity.
- The Internal Revenue Service limited the number of tax returns that went to financial accounts or addresses.
- The Internal Revenue Service withheld personal information from tax transcripts. taxes.
multi-factor authentication can help
It is important for taxpayers filing in 2021 to know that online tax software products available to both taxpayers and tax professionals will include options for multi-factor authentication. multi-factor authentication allows users to better protect online accounts. One way to achieve this is by requiring a security code to be sent to a mobile phone in addition to the username and password used to access the account.
The IRS and its Security Summit partners have formed a clearinghouse that allows them to quickly identify emerging scams and react to protect taxpayers. the identity theft tax refund fraud analysis and exchange centerpdf is now operational.
Also, check out our recent detailed analysis column for more information on how to be on the lookout for tax scams. Visit Identity Theft Central and Tax Fraud Alerts for more information on how to protect yourself or report identity theft or fraud.