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Every year the IRS publishes a “Dirty Dozen” list of scams. The 2021 list is must-read.

Pandemic Scams

We start our count-down with the pandemic-related scams. Top is the stimulus payment theft, which comes in the form of text messages, phone calls and emails asking about bank account information or requesting recipients to click on a link or verify personal data to receive the payment. These should be deleted without opening. Remember, the IRS will not initiate contact by phone, email, text, or social media.

Next up are scammers filing fraudulent claims for unemployment compensation using stolen personal information. If you receive a Form 1099-G, which reports unemployment compensation, submit a fraud report to the Texas Workforce Commission.

Phishing and Vishing Scams

Moving on to old scams with new twists: phishing emails. These target individuals to steal personal information. They are often disguised to look like they are from the IRs. This year they have expanded their targets to tax professionals requesting verification of, or offers to buy, Electronic Filing Identification Numbers and Centralized Authorization File numbers. Another scam starts with an email from a “new client” that requests tax help and attaches a prior year tax return or IRS notice. The attachments, of course, contain a computer virus.

Another oldie but goodie – vishing scams. These are voice-related phishing scams, usually asking for personal or financial information. If you receive one, hang up without giving information.

Online Scams

Social media scams are emails or texts from a con who impersonates the victim’s family, friends, or co-workers, using information that the victim has posted on a social media platform. Often the contact includes a link that contains malware. Do not post personal information and do not click on a link, even if it seems to be from a friend.

Ransomware, a form of malicious software that blocks access to a computer system or data, is on the rise. This is usually downloaded by the victim by clicking on a link or going to a malicious site.

Tax Scams

Predators often use tax-related schemes that target seniors or immigrants. Fake charities requesting donations for disaster relief efforts are especially popular. These usually originate via a phone call that pressures the victim. Never let a caller pressure you. Before you donate, ask for the charity’s exact name, web address and mailing address, and then use the IRS Tax Exempt Organization Search tool to check it out. Only send donations to the organization’s listed address. Never pay by giving numbers of a gift card or with a wire transfer.

Some scammers will contact seniors or groups with limited English proficiency, pose as the IRS and threaten jail time, deportation or revocation of a driver’s license if the victim does not immediately pay. Your reaction should be to hang up.

The IRS is especially hot about unscrupulous tax return preparers, who will not sign the tax returns they prepare. This should be a red flag that the tax preparer is bogus. Other indicators: requiring cash payment without a receipt, inventing income to qualify their clients for tax credits, claiming fake deductions to boost the size of the refund, and directing refunds to the preparer’s bank account instead of the taxpayer’s own account. Take a look at the IRS.gov page Choosing a Tax Professional.

The IRS finishes the list with false tax schemes. These include syndicated conservation easements, abusive micro-captive arrangements, the US-Malta Income Tax Treaty, improper claims of business research credits, and improper monetized installment sales.
See irs.gov/newsroom/dirty-dozen. And be careful out there.

Virginia Hammerle is president of Hammerle Finley Law Firm. She is an Accredited Estate Planner, has been Board Certified in Civil Trial Law for 25 years, and ranked a Super Lawyer for the past 10 years. She blogs regularly on senior issues and the law and has a monthly newsletter. Contact at legaltalktexas@hammerle.com.