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September 2021

In this month's newsletter, I highlight several of the key scams included in what the IRS identifies as the worst 2021 "Dirty Dozen" tax scams affecting both individuals and corporations. 

"The IRS urges all taxpayers to be on guard, especially during the pandemic, not only for themselves, but also for other people in their lives."

If you want to see the complete IRS list, click here. 
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IRS "Dirty Dozen" Scams - Highlights

I. Social Media Scams
Taxpayers should be aware of social media scams, which frequently use events like COVID-19 to try to trick people. Social media enables unscrupulous individuals to lurk on accounts and extract personal information to use against the victim. These cons may send emails impersonating the victim's family, friends or co-workers.

Social media scams have also led to tax-related identity theft. The basic element of social media scams is convincing a potential victim that he or she is dealing with a person close to them that they trust via email, text or social media messaging.

II. Fake Charities
The IRS advises taxpayers to be on the lookout for scammers who set up fake organizations to take advantage of the public's generosity. They especially take advantage of tragedies and disasters, such as the COVID-19 pandemic.

To check the status of a charity, use the IRS Tax Exempt Organization Search tool.

Here are some tips to remember about fake charity scams:

• Individuals should never let any caller pressure them. A legitimate charity will be happy to get a donation at any time, so there's no rush. Donors are encouraged to take time to do the research.
• Potential donors should ask the fundraiser for the charity's exact name, web address and mailing address, so it can be confirmed later. Some dishonest telemarketers use names that sound like large well-known charities to confuse people.
• Be careful how a donation is paid. Donors should not work with charities that ask them to pay by giving numbers from a gift card or by wiring money. That's how scammers ask people to pay. It's safest to pay by credit card or check — and only after having done some research on the charity.

III. Ransomware on the rise
Financial institutions should be aware of trends and indicators of ransomware, which is a form of malicious software ("malware") designed to block access to a computer system or data. Access is often blocked by encrypting data or programs on information technology (IT) systems to extort ransom payments from victims in exchange for decrypting the information and restoring victims' access to their systems or data. In some cases, in addition to the attack, the perpetrators threaten to publish sensitive files belonging to the victims, which can be individuals or business entities.


IV. Impersonator phone calls/vishing
Individuals should be wary of unexpected phone calls asking for personal financial information. The IRS has seen an increase in voice-related phishing, or 'vishing,' particularly from scams related to federal tax liens. For those receiving phone calls out of the blue, security experts recommend asking questions of the caller but not providing any personal information. If in doubt, hang up immediately.

Recommended things to remember about the IRS:

• The IRS generally first contacts people by mail - not by phone - about unpaid taxes.
• The IRS may attempt to reach individuals by telephone but will not insist on payment using an iTunes card, gift card, prepaid debit card, money order or wire transfer.
• The IRS will never request personal or financial information by e-mail, text or social media.

IV. Offer in Compromise "mills"
Offer in Compromise mills contort the IRS program into something it's not – misleading people with no chance of meeting the requirements while charging excessive fees, often thousands of dollars.

"We're increasingly concerned that people having trouble paying their taxes are being duped into misleading claims about settling their tax debts for 'pennies on the dollar'... "The IRS urges people to take a few minutes to review information on IRS.gov to see if they might be a good candidate for the program – and avoiding costly promoters who advertise on radio and television."

Taxpayers should be especially wary of promoters who claim they can obtain larger offer settlements than others or who make misleading promises that the IRS will accept an offer for a small percentage. Companies advertising on TV or radio frequently can't do anything for taxpayers that they can't do for themselves by contacting the IRS directly.
 
Taxpayers can go to IRS.gov and review the Offer in Compromise Pre-Qualifier Tool to see if you qualify for an OIC.