Alright, readers, before we jump into the tax scams 2021 edition, let’s circle back on some info we posted about recently … the IRS sent out a lot of moolah last week — and, if you have children, you might have received some.
Note: If you received it, this is an advance on future tax credits. It is not a “stimulus” … rather it is sending you what you would ALREADY be receiving come tax time in early 2022.
And, again … a few things parents might want to do:
- If you want to check your eligibility for these payments, you can do that here.
- If you want to update the bank account that the IRS will use to deposit your payments, you can do that here.
- If you want to “opt-out” of payments (i.e. “save” the full credit amounts for your 2021 tax return), you can do that here. NOTE: If your income has increased in 2021, relative to past years, you may want to opt-out of these advance payments to avoid any danger of needing to pay back the amounts received.
- If you (or someone you know) doesn’t file tax returns but has kids, the IRS has created a “non-filer tool” here, where you can register yourself and your children, so that you will receive the payments (if you are eligible).
Keep in mind that we are not the IRS (thank goodness) and we are not responsible for anything the IRS does or doesn’t do.
All of this might feel a little bit like … well, a scam.
And that feeling isn’t coming from nowhere. There’s a fair amount of that going around these days. So, let’s jump into our list of tax scams 2021 edition…
Emelia Mensa, CPA’s Tax Scams 2021 Edition: The Big 12
“The only thing to do with good advice is to pass it on. It is never of any use to oneself.” – Oscar Wilde
Once a year, everybody’s favorite federal agency releases its list of the biggest tax-related scams (usually a “Dirty Dozen”). The tax scams 2021 list includes some new players. Some of these scams involve stealing tax info, others just happen around tax time. Most involve swiping your financial information or tapping your hard-earned money.
With uncharacteristic generosity, the IRS includes a few tips for what you can do to protect yourself from these vagrants. And they may seem like common sense, but you’d be surprised just how many people get duped year after year – often with terrible consequences for their bank accounts.
Here are a few of the biggest rip-offs over the past year Connecticut residents should know about.
Whole lot of scammin’ goin’ on
The tax scam 2021 list covers four categories: pandemic-related scams like Economic Impact Payment theft, personal information cons, ruses focusing on unsuspecting victims, and schemes that promise more than they deliver.
Let’s start with theft of Economic Impact Payments – aka stimulus (you know…those $1,400 payments you got last spring). Crooks tried to get their dirty little mitts on this money by any means necessary: text messages, random incoming phone calls, or emails requesting bank account information. Sometimes they ask you to click a link or verify data.
(Crooks even tried to swipe good ole fashioned paper checks out of mailboxes.)
Remember… The IRS will never initiate contact with you by phone, email, text, or social media. They only use U.S. mail. And they never ask you out of the blue for your Social Security number or other info related to your stimulus.
In yet another rip-off scheme, many taxpayers lost their jobs over the past year and received unemployment compensation from their home state. This chaos in the job market inspired some scammers to file fake unemployment compensation claims using the stolen ID information of anyone who had not filed claims. That means, the payments made on these claims bypassed the honest Joe and went straight to the thieves.
The IRS’s advice? Be on the lookout for receiving a Form 1099-G reporting unemployment compensation you didn’t receive. Contact your state’s unemployment agency immediately if you get one.
Among other scams:
It’s who you know. Often, criminals pose as someone you know or frequently interact with, a social or family relationship, or even a business contact. They rake in a lot of this information from social media including your contacts, “friends,” or one of your areas of interest becomes the bait. (Though it can be a pain, you should absolutely check to make sure your social media privacy settings are offering enough protection.)
Using the same slimy lure, “phishing” scammers try to trick you into infecting your own computer or phone with downloaded malware. These schemes can be tricky and cleverly disguised to look like they’re from the IRS.
(Everybody’s fair game for these crooks, who even go after tax preparers with this tactic.. sometimes claiming to be new in New Haven County and needing to get their taxes done.)
“Vishes” do come true. You or anybody you know recently get a call from somebody claiming you’re going to get hit with tax trouble? Did the caller mention an iTunes card, gift card, prepaid debit card, money order, or wire transfer? The IRS has seen an increase in what they term voice-related phishing, or “vishing,” particularly from scams related to federal tax liens (when the government seizes property for back taxes).
Ask questions of the caller but tell them nothing. If you’re in doubt any time during the call, click.
Don’t just open your wallet. Scammers set up fake organizations to take advantage of your big heart. They especially like to take advantage of tragedies and disasters primarily by phone, sometimes using a charity name that only sounds like the name of a well-known charity.
Always check out any charity before you just open your heart (and your wallet) – you only get a tax deduction for giving to a legitimate charity.
Also, real charities don’t pressure call. A legit charity is simply happy to get a donation at any time. Check out the charity’s exact name and web/mailing address. And don’t give to anybody who wants a donation using numbers from a gift card or by you wiring money.
Vulnerable groups. Scammers have a much-deserved rep for threatening target groups like senior citizens or those with limited English proficiency. You, a friend, or loved one may get a call from someone claiming to be the IRS and threatening jail, deportation, or revoking of a driver’s license. In this case, there’s only one course of action: hang up.
An offer you CAN refuse. An Offer in Compromise (OIC) is an IRS program to help people who owe huge back taxes (the IRS generally “compromises” and takes less than the full amount of back taxes owed), but OICs have stringent requirements.
Over the past year or so, it’s turned out that a lot more people have found themselves owing a significant amount of back taxes. Enter scammers and their OIC “mills” who charge big fees claiming to help people in these situations, when in reality the person in debt has no way of meeting the OIC requirements. Beware those greasy promoters who claim they can clear up your tax troubles for pennies on the dollar or who guarantee (for a “small” percentage) that the IRS will jump at your “offer.”
With the tricksters getting sneakier every year, it helps to know what to watch out for.
For a look at your plans, and how your personal financial decisions are impacting your freedom (and your taxes) … we’re right here: waterbury-cpa.com/schedule/
Stay safe out there,
Emelia Mensa EA, CPA