June 28, 2021
The Internal Revenue Service began its "Dirty Dozen" list for 2021 with a warning for taxpayers, tax professionals and financial institutions alike to be on the lookout for 12 nefarious schemes and scams.
This year's "Dirty Dozen" is separated into 4 categories:
Pandemic-related scams such as Economic Impact Payment theft
Personal information cons including phishing, ransomware and phone "vishing"
Ruses focusing on unsuspecting victims such as fake charities and senior/immigrant fraud
Schemes that persuade taxpayers into unscrupulous actions like Offer In Compromise mills and syndicated conservation easements
These categories are based on who perpetuates the schemes and who they impact. In addition to the scams announced today, the IRS will highlight other schemes over the next three days, urging everyone to be on guard, especially during the pandemic, for themselves and for other people in their lives. People should review the "Dirty Dozen" list in this special section on the IRS website and be alert to these scams during tax filing season and throughout the year. .
"We continue to see scam artists use the pandemic to steal money and information from honest taxpayers in a time of crisis," said IRS Commissioner Chuck Rettig. "We provide this list to alert taxpayers about common scams that fraudsters use against their victims. At the IRS, we are dedicated to stopping these criminals, but it's up to all of us to remain vigilant to protect ourselves and our families."
Economic Impact Payment Theft
A continuing threat to individuals is from identity thieves who try to steal Economic Impact Payments (EIPs), also known as stimulus payments. Most people will get their payments automatically from the IRS.
Be on the lookout for these tell-tale signs of a scam:
Any text messages, random incoming phone calls, or emails asking 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. Check your mail frequently and report suspected mail losses to Postal Inspectors.
Don't fall for stimulus check scams. 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.
Remember that the IRS website, IRS.gov, is the agency's official website for information on payments, refunds and other tax information.
Unemployment Fraud Leading to Inaccurate Taxpayer 1099-Gs
Many people lost their jobs and received unemployment compensation from their state because of the COVID-19 pandemic. 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.
Be on the lookout for receiving a Form 1099-G that reports unemployment compensation you didn't receive. If you get one, you should contact your state agency for a corrected form. If a corrected form can't be obtained in time to file a timely tax return, you should complete your return claiming only the unemployment compensation and other income that you actually received.
Refer to Identity Theft and Unemployment Benefits for tax details, and DOL.gov/fraud for state-by-state reporting information.
Additional Protection to Help Protect Taxpayers
IP PINs Add Another Layer of Security
The IRS made its Identity Protection PIN (IP PIN) program available to everyone this year to help avoid identity theft. Previously, it was only available to victims of ID theft or people 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 essentially a way to lock a tax account. The IP PIN serves as the key to opening that account. Electronic returns that don't contain the correct IP PIN will be rejected, and paper returns will go through additional scrutiny for fraud.
Reducing Identity Theft-Related Fraud
The IRS and its Security Summit partners in the states and private-sector tax community made changes to help reduce identity theft-related refund fraud that the average person filing a return will notice:
Tax software providers agreed to strengthen password protocols. This is the first line of defense for them to make sure their products are secure.
State tax agencies began asking for taxpayers' driver's license numbers as another way for people to prove their identities.
The IRS limited the number of tax refunds going to financial accounts or addresses.
The IRS masked personal information from tax transcripts.
Multi-factor Authentication
It's important for people filing taxes in 2021 to know that online tax software products available to both individuals and tax professionals alike will contain options for multi-factor authentication. Multi-factor authentication allows users to better protect online accounts. One way this is accomplished is by requiring a security code to be sent to a cell phone in addition to the username and password used to access the account.
The IRS and its Security Summit partners formed an information sharing center, Identity Theft Tax Refund Fraud Information Sharing and Analysis Center, that allows them to identify emerging scams and react to protect taxpayers quickly.
Resources:
The IRS recent A Closer Look column has information on how to be vigilant about tax scams.
Identity Theft Central and Tax Fraud Alerts have information on how to protect against or report identity theft or fraud.