The Internal Revenue Service (IRS) has released its annual “Dirty Dozen” fraud warnings for all taxpayers to be on guard. The newest cautions for 2021 are highlighted within four separate categories: pandemic-related scams like Economic Impact Payment theft; personal information cons including phishing, ransomware and phone ‘vishing’; ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud; and schemes that persuade taxpayers into unscrupulous actions. The agency compiled the list into these categories based on who perpetuates the schemes and who they impact.
John Kasperek Co., Inc. encourages all clients to review the special section on IRS.gov to be alert for to these scams throughout the year in order to protect yourselves, your families and your businesses. Three key highlights include:
Economic Impact Payment Theft
Be aware of the continuing threat from identity thieves who try to steal stimulus payments (titled Economic Impact Payments or EIPs). Most eligible people will get their payments automatically from the IRS.
- Any text messages, random incoming phone calls or emails inquiring about bank account information or requesting recipients to click a link or verify data should be considered suspicious and deleted without opening.
- Be alert to mailbox theft. Frequently check mail and report suspected mail losses to Postal Inspectors.
- The IRS won’t initiate contact by phone, email, text or social media asking for Social Security numbers or other personal or financial information related to Economic Impact Payments.
Because of 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 claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made on these fraudulent claims went to the identity thieves. The IRS reminds taxpayers to be on the lookout for receiving a Form 1099-G reporting unemployment compensation that they didn’t receive. For people in this situation, the IRS urges them to contact their appropriate state agency for a corrected form. If a corrected form cannot be obtained so that a taxpayer can file a timely tax return, taxpayers should complete their return claiming only the unemployment compensation and other income they actually received. See Identity Theft and Unemployment Benefits for tax details and DOL.gov/fraud for state-by-state reporting information.
Identity Protection PINs
To help protect against identity theft, the IRS this year made its Identity Protection PIN (IP PIN) program available to all taxpayers. Previously it was available only to victims of ID theft or taxpayers in certain states. The IP PIN is a six-digit code known only to the taxpayer and to the IRS. It helps prevent identity thieves from filing fraudulent tax returns using a taxpayer’s personally identifiable information. Using an IP PIN is, in essence, a way to lock a tax account. The IP PIN serves as the key to opening 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.