My son is annoyed that telemarketers and scammers have figured out his cell phone number. He doesn’t have a credit card—so there’s no Citibank card to be compromised—and he doesn’t drive—so his car warranty is not in danger of expiring soon. More often than not, we joke that “Mr. Scam Likely” is calling.
But scammers keep calling because every now and again, they get lucky. With a few sneaky phrases—and often, some intimidation—they can trick victims into giving up personally identifiable information used to steal identities or handing over bank and credit card information.
Thieves don’t just rely on car warranties and credit card schemes: They also use tax-related scams. That’s why for nearly two decades, the IRS has issued an annual “Dirty Dozen” list, highlighting a variety of attempts to steal money and information from taxpayers, tax professionals, and financial institutions.
That hasn’t changed as we are coming out of the pandemic. “We continue to see scam artists use the pandemic to steal money and information from honest taxpayers in a time of crisis,” IRS Commissioner Charles Rettig, said recently.
The IRS is, he says, taking steps to stop these fraudsters, but taxpayers need to remain vigilant. Here’s a quick peek at some of the scams to be on the lookout for in 2021.
Pandemic-related scams like Economic Impact Payment (also called an EIP or stimulus check) theft are making the rounds. You won’t be asked by the IRS to verify your bank account or other data via text message, phone call, or email. If you receive any of these requests, don’t click on any links or provide any information.
Temporary increases in available unemployment benefits provided opportunities for thieves. Scammers filed fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims—but directed payments to other addresses. If you received Form 1099-G reporting unemployment compensation that you didn’t receive, reach out to your appropriate state agency for a corrected form. If you can’t get an updated form, don’t report the proceeds on your tax return. You don’t have to file Form 14039, Identity Theft Affidavit, but you may want to opt into the IRS Identity Protection PIN program.
The numbers of fake emails, text messages, websites, and social media attempts to steal personal information aren’t slowing down. Thieves often send communications that appear to come from legitimate sources—like the IRS website—but are really efforts to convince you to hand over personal information or download programs that can mine data from your devices. Don’t open attachments in those emails or text messages, and don’t click on any links. If you’re instructed to visit a website like IRS.gov, and you’re not sure that it’s a legitimate request or if it doesn’t come from a trusted source, just navigate directly to the site from your browser.
And those phone calls? By now, you should already know to hang up if you receive a call from someone claiming to be from the IRS and you do not owe tax or if you are immediately aware that it’s a scam. Remember, the IRS doesn’t initiate contact with taxpayers by phone, and will not call to demand immediate payment or threaten to have you arrested for not paying. If you’re not sure whether a call is legitimate, hang up and call back using an official number: Don’t just use the caller ID on your phone since those can easily be spoofed. To reach the IRS, call 1-800-829-1040.
Still, phone-related scams persist. The IRS has seen an increase in voice-related phishing—or “vishing”—scams, especially those related to federal tax liens. During 2020, almost 400 vishing scams were reported, a 14% increase from the prior year. A quarter of those calls tried to use fake tax lien information to intimidate potential victims. I’ve also had taxpayers report the receipt by mail of threatening tax lien-related notices allegedly related to the IRS. That’s not how the IRS operates. Don’t be bullied into handing over your personal information or paying money for services you may not need.
Tax professionals aren’t spared from these schemes. The IRS has reported an uptick in scams involving the verification of Electronic Filing Identification Numbers (EFIN) and Centralized Authorization File (CAF) numbers. Again, don’t be fooled. Instead, report those schemes to the Treasury Inspector General for Tax Administration.
Additionally, the IRS has also noted an increase in offers to buy and sell EFINs and CAFs. Remember to guard your credentials closely: EFINs and CAFs may not be sold or transferred.
And those “I hope you are taking on new clients” emails? I’ve been getting them, too, as well as phony invoices for equipment. There are many variations of these schemes, so use caution when opening unsolicited emails and don’t click on any attachments. I recommend requiring potential new clients to go through your normal intake channels since chances are that scammers won’t want to jump through any extra hoops.
Financial institutions aren’t immune to potential harm either. Ransomware incidents—like this one—are still happening across the country. Typically, thieves try to find a weak link to access a company’s computer system or data. Then, they hold the system or data hostage in exchange for ransom payments, often to be paid in Bitcoin or another cryptocurrency. You should report any such attacks immediately.
Even if you are careful, the reality is that everyone is vulnerable to identity theft. Many third parties have access to your data, including trusted advisors like your tax professional, stores and restaurants you frequent, banks and financial institutions, and health care providers.
If your data is compromised, it’s not the end of the world. Take a deep breath and then make an effort to mitigate any damage to your credit or your accounts, including notifying your financial institution of the breach.
But you can reduce your chances of being a victim by learning about recent scams, and finding out what extra steps you can take to protect yourself. My best advice: Stay informed.
You can find out more about tax-related scams on the Dirty Dozen page of the IRS website.
This is a weekly column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.