Tax scams are nothing new. They’ve been around for a while and will continue for the foreseeable future. The only thing that will change is how scam artists run these cons.
In 2021, the IRS saw some new scams, many of which have some relation to the coronavirus. In this blog post, we’ll take a look at a few of these scams, including how they work and how to identify them.
Child Tax Credit Advance Payments
It’s unknown if Congress will authorize a fourth round of Economic Impact Payments, but if you’ve got one or more kids, there’s a good chance you could see monthly payments from the IRS. Many of these child tax credit advance payments will be sent straight to your bank account through direct deposit. Therefore, many scammers will try to trick you with emails or text messages into handing over your bank account information, especially your online banking login credentials.
Major Disasters
If you’re the victim of a major disaster, such as a much-publicized natural disaster or man-made tragedy, you may be eligible to take a casualty, theft or disaster tax deduction. A few particularly clever scammers will reach out to victims of an event that may result in this tax deduction and claim to be from the IRS. The scam artist will then convince the victim to provide personal information or maybe pay a fee to initiate or assist with the casualty tax deduction process.
Fraudulent Unemployment Benefits
One of the most prominent coronavirus relief payments has come through enhanced unemployment benefits. These have both increased the weekly benefits many unemployed individuals have received, as well as how long they can receive those payments.
A few scammers have taken advantage of this by using identity theft to fraudulently claim unemployment benefits. This means it’s possible that around tax season, you’ll get Form 1099-G showing your unemployment benefits that the IRS believes are taxable.
If this happens to you, it’s likely someone stole your identity and used it to wrongfully claim unemployment benefits under your name and/or social security number. The U.S. Department of Labor has a list of things you should do if you find yourself in this situation.
How to Identify a Scam
One of the quickest and easiest ways to tell if someone is trying to scam you concerning your taxes is if they’re making initial contact with you through social media, text message or email. Scammers will also try and scare potential victims with arrest. However, IRS also won’t threaten you with jail.
If you want to learn about other telltale signs of an IRS scam, check out the article, “How to Know It’s Really the IRS Calling or Knocking on Your Door.”
How to Report an IRS Scam
If you believe you or someone you know is the victim of a tax scam (or an attempted scam), please contact the Tax Inspector General for Tax Administration or the FTC Complaint Assistant.
If you have additional questions, the good news is that Kienitz Law is here to help you with your tax issues. Schedule your FREE consultation today!
The good news is Kienitz Tax Law is here to help you with your tax issues. Schedule your FREE consultation today!