July 30, 2020 12:17 am

Dirty Dozen Tax Scams for 2020

Usually, the IRS releases a list of scams early in the tax season to warn taxpayers of potential risks. This year, the list was released after the filing deadline (IR-2020-160). The list puts special emphasis on “aggressive and evolving schemes related to coronavirus tax relief, including Economic Impact Payments.”

  1. Phishing. This is the practice of using fake emails or websites in attempts to steal personal information. Remember that the IRS NEVER initiates contact with taxpayers via email about a tax bill, refund, or Economic Impact Payment.
  2. Fake charities. These are fraudulent schemes using names similar to legitimate charities to trick people into sending money or providing personal information.
  3. Threatening impersonator phone calls. Here criminals claim to be from the IRS and threaten arrest, deportation, or license revocation if the taxpayer doesn’t immediately pay a bogus tax bill.
  4. Social media scam. These are aimed at identity theft of the victim, while also enabling thieves to go after family and friends.
  5. EIP or refund theft. While the IRS has tried to protect taxpayers from theft of Economic Impact Payments (EIPs) and tax refunds, there’s still considerable fraud. Thieves file false returns to claim benefits.
  6. Senior fraud. There is pervasive fraud targeting senior citizens, including financial abuse.
  7. Scams targeting non-English speakers. Robocalls or calls by real persons that may have some personal information (e.g., the last 4 digits of a Social Security number) try to obtain additional information. IRS impersonation is also being done with these individuals.
  8. Unscrupulous return preparers. Watch out for “ghost preparers” who don’t sign returns and can expose clients to potentially serious filing mistakes, including fraud and the risk of losing refunds.
  9. Offer in compromise mills. These are companies that exaggerate their ability to settle IRS claims for pennies on the dollar while collecting hefty fees for applications not likely to be approved.
  10. Fake payments with repayment demands. Scam artists use a taxpayer’s personal data, including bank information, to file bogus tax returns with a refund claim. Once the funds are in the taxpayer’s bank account, the fraudster calls the taxpayer posing as an IRS employee and tells the taxpayer the refund was sent in error and to immediately return the money…to the scam artist. The taxpayer is instructed to buy a gift card for the refund amount.
  11. Payroll and HR scams. These are designed to steal W-2 information through Business Email Compromise (BEC) or Business Email Spoofing (BES).
  12. Ransomware. This is a growing cybercrime and the IRS warns that cybercriminals might use phishing related to COVID-19 (e.g., a fake charity) to get into a taxpayer’s computer system.
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Tax Glossary

Constructive receipt

A tax rule that taxes income that is not received by you but that you may draw upon.

More terms