Every year, the IRS compiles a list of common tax scams plaguing taxpayers each year. In a recent Information Release, they have announced the 2020 version of their annual “Dirty Dozen” tax scams to look out for.

This year, the “Dirty Dozen” list focuses on scams that target individual taxpayers. They’ve placed special emphasis on aggressive and worsening schemes related to COVID-19 tax relief. We urge you to be aware of these scams to protect yourself, your business, and your family.  

Here are the 12 Most Dangerous scams identified by the IRS in 2020… 


1. Phishing Scams

Be alert to potential fake emails or websites looking to steal personal information. The IRS will never contact you via email regarding a tax bill, refund, or Economic Impact Payment (stimulus payment). 

IRS Criminal Investigation has seen an enormous increase in phishing scams utilizing keywords like “coronavirus,” “COVID-19,” and “stimulus.” Cybercriminals are capitalizing on the heightened fear surrounding recent events, and you shouldn’t leave yourself vulnerable to these attacks.


2. Fake Charities

Criminals frequently exploit natural disasters and other situations, such as the current COVID-19 pandemic, by setting up fake charities to steal from people trying to help in times of need. 

These can be tricky – scammers might contact you by telephone, text, social media, e-mail, or in-person. They’ll often create bogus website names that are very similar to legitimate charities to trick people into donating money or sharing their secret financial information. 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. 

The moral of the story is this: before giving your money or personal information anywhere, double and triple check the name and legitimacy of the organization. 


3. Threatening IRS Impersonation Phone Calls 

Too often, IRS impersonation scams come in the form of a threatening phone call from a criminal claiming to be with the IRS. The IRS will never threaten a taxpayer or demand immediate payment, ask for financial information over the phone, or call about an unexpected refund of EIP. 


4. Social Media Scams

You need to protect yourself against social media scams, which use highly emotional events like COVID-19 to trick people. Social media enables anyone to share all sorts of information with others on the Internet, which helps scammers to use your information for a wide variety of attacks. 


5. EIP or Refund Theft

Historically, thieves have stolen tax refunds, but this year, more criminals than ever have turned their attention to stealing EIPs. EIPs are one-time payments to taxpayers provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Criminals use stolen information to file false tax returns or to supply other false information to the IRS to divert refunds to the wrong addresses or bank accounts. 

If you think you may have been a victim of identity theft, please get in touch with us, or consult the Taxpayer Guide to Identity Theft


6. Senior Fraud

Unfortunately, senior citizens are more likely to be targeted and victimized by scammers than other segments of society. Seniors and their caregivers need to be wary of tax scams that target older Americans. 

Older Americans’ increasing engagement with social media provides a new way for scammers to interact with seniors. Continue to be alert against fake emails, texts, and websites that try to steal personal information. 


7. Scams Targeting Non-English Speakers 

Those with limited English proficiency are likely targets for an online scammer. Too often, immigrants and non-English speakers are threatened with jail time, deportation, or revocation of a driver’s license from someone claiming to be with the IRS.

Recent immigrants are the most vulnerable to these scams and should not engage with these scammers. 


8. “Ghost” and Other Bad Return Preparers 

“Ghost” return preparers don’t sign the tax returns they prepare. They may print the prepared tax return and tell the taxpayer to sign it and mail it to the IRS, or they may not digitally sign an e-filed return as a paid preparer. By law, paid preparers must sign and include their Preparer Tax Identification Number (PTIN) on returns.

Beware of preparers who promise inflated refunds by claiming fake tax credits, who ask you to sign a blank return, promise a big refund before looking at your records, or charge fees based on a percentage of the refund.


9. Tax Debt Resolution Companies 

Beware of tax debt resolution companies that exaggerate their ability to settle tax debts for “pennies on the dollar” through an offer in compromise (OIC).

An OIC allows a taxpayer to settle a tax debt for less than the full amount owed. This might be a legitimate option if the taxpayer can’t pay the full tax liability or doing so creates a financial hardship. 

However, to qualify for an OIC, taxpayers must meet very specific criteria. You can use the IRS’s free online Offer in Compromise Pre-Qualifier tool to see if you qualify for an offer-in-compromise, and obtain an estimated offer amount, without paying fees to a debt resolution company. You can also get in touch with us to help you apply for an OIC. 


10. Fake Payments with Repayment Demands. 

Criminals are always finding new ways to trick taxpayers into believing their scam.  This year, they’ve gone as far as putting a bogus refund into the taxpayer’s bank account. Here’s what happens: the scammer files a bogus tax return and has the refund deposited into the taxpayer’s checking or savings account. Once the direct deposit hits the taxpayer’s bank account, the scammer calls the taxpayer posing as an IRS employee and asks the taxpayer to return the money via a specific type of gift card for the amount of the refund.

The IRS will never demand payment by a specific method. There are many payment options available to taxpayers, and there’s also a process through which taxpayers have the right to question the amount of tax the IRS says they owe. If you ever receive an unexpected refund and a call from the IRS out of the blue demanding a refund repayment, then it’s time to contact the IRS directly, or give us a call, so we can investigate with our forensic accounting services. 


11. Payroll and HR scams.  

Be on guard against phishing designed to steal Form W-2s and other tax information. With so many businesses closed and having their employees working from home due to COVID-19, criminals are taking advantage of displaced workers. 

These are called Business Email Compromise (BEC) or Business Email Spoofing (BES) scams. BEC/BES scams have used a variety of ploys to include requests for wire transfers, payment of fake invoices as well as others. Currently, two of the most common types of these scams are the Gift Card Scam and the Direct Deposit Scam.

In the Gift Card Scam, a compromised email account is often used to send a request to purchase gift cards in various denominations.

In the Direct Deposit Scam, the criminal may have access to the victim’s email account and impersonate the victim to change their direct deposit information to reroute their deposit to an account the fraudster controls.

The Direct Deposit and other BEC/BES variations should be forwarded to the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) where a complaint can be filed. The IRS requests that Form W-2 scams be reported to: phishing@irs.gov (Subject: W-2 Scam).


12. Ransomware

Ransomware is malware that, once downloaded, searches for and captures critical or sensitive data on the victim’s computer. In some cases, entire computer networks can be negatively impacted. Scammers may use a phishing email to trick a potential victim into opening a link or downloading an attachment that contains the ransomware. 

To protect yourself from ransomware attacks, you can download free, multi-factor authentication software to your computer.

The Information Release recommends that taxpayers and tax professionals use the free, multi-factor authentication feature available with their tax preparation software to protect against data thefts.  Two-factor authentication means that you must enter your username/password credentials, plus another data point that is specific to you, such as a security code sent to your phone.


We hope this list helps you be aware of some of the dangers that are prevalent today. 

If you’ve been a victim of any of these scams, don’t hesitate to get in touch with us today. Our team is trained in forensic accounting and can help you identify and solve any fraud in your finances. Likewise, if you need a trustworthy tax advisor, know that Culpepper CPA has your safety as our number one priority at all times. We are committed to protecting your personal information, preparing accurate and compliant tax returns, and taking advantage of any legitimate tax-saving opportunities that might be available to you.

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