They say two inevitable things in life are death and taxes. But that’s an incomplete expression as it leaves out another mainstay of life: scammers.
Back in the day, many tax scammers stepped up their criminal activity on or around tax season. But in today’s modern world, scammers continue to come up with schemes and find victims no matter what time of the year it is. And thanks to economic instability from things like the coronavirus, there are more opportunities for con men and women to take advantage of victims.
Year-Round Tax Scam #1: Unemployment Benefits
The coronavirus pandemic brought about an unprecedented number of unemployed workers. In response, there was a greater number of unemployment payments to more individuals, plus supplemental payments. This made unemployment fraud more profitable for scammers.
Based on identity theft, scammers will use the identities of their victims to file an unemployment claim. Once approved, the payments go to the scammer instead of the identity theft victim. The California Employment Development Department (EDD) is aware of this rise in unemployment fraud and has a website with information to help avoid falling prey to these criminals.
One of the defining ways to tell if you’re a victim is if you receive a Form 1099-G, even though you never applied for or received unemployment payments.
Year-Round Tax Scam #2: Offer-In-Compromise Mills
An offer in compromise (OIC) is a program that allows taxpayers to settle their tax debts with the IRS for less than what the taxpayer owes. For taxpayers with unmanageable tax debts, the promise of getting the IRS to accept an offer in compromise is very appealing.
Scammers know this and entice taxpayers with promises of making their tax debts go away for pennies on the dollar. All the while, the taxpayer pays the scammer for OIC “services” even though the OIC mill is doing nothing to help the taxpayer settle his or her tax debt.
Reason #3: They Can Talk to the IRS or Taxing Year-Round Tax Scam #3: Stealing Economic Impact Payments on Your Behalf
Much of the federal stimulus checks authorized by Congress have already been paid out. But there may be some payments still waiting to be sent. Additionally, there could be supplemental “plus-up” payments possible for those with updated tax information. Either way, scammers are still trying to steal taxpayers’ personal information to have the payments redirected to the scammer.
The Bottom Line
Any time government benefits are getting distributed, taxpayers need to be vigilant. If you feel you’ve been a victim of a tax scam, or that someone is trying to scam you, please report the scam to the Tax Inspector General for Tax Administration, Federal Trade Commission or the applicable state agency like California’s EDD.
The good news is Kienitz Tax Law is here to help you with your tax issues. Schedule your FREE consultation today!