The IRS continues to see criminals use a variety of scams that target honest taxpayers. In some cases, the scams trick taxpayers into doing something illegal or that causes them financial harm. These scammers may cause otherwise honest people to do things they don't even realize are illegal, or prey on their good will to steal their money.
Here are two of this year's related Dirty Dozen scams.
Fake Charities
People should be on the lookout for scammers who set up fake organizations to take advantage of the public's generosity. Scammers love to take advantage of tragedies and disasters. Scams requesting donations for disaster relief efforts are especially common over the phone. People should always investigate a charity before they donate, and they should not feel pressured to give immediately.
People who give money or goods to a charity may be able to claim a deduction on their tax return; however, to receive a deduction, they must donate to a qualified charity. It's also important to remember that they can't deduct gifts to individuals or to political organizations and candidates. Not every call seeking a donation is from a charity. Some calls might be from a Political Action Committee (PAC) where donations are not deductible and the PAC will use the money in a different manner than a charity would. Find out if any charity that contacts you is raising money for a charity or a Political Action Committee (PAC).
People can use the IRS Tax Exempt Organization Search tool to check the status of a charity. If donations really are tax deductible, the organization will be listed there. Remember that donations to individuals and PACs are not tax deductible.
Here are some tips to help avoid fake charity scams:
Real charities can only call during specific times. They can't call you before 8 a.m. or after 9 p.m.
A charities' caller ID has to be truthful. The caller ID on your phone has to show the name of the charity or fundraiser, along with a number that you can call to ask to be placed on the charity’s do not call list.
Charities can’t use a robocall or pre-recorded message to reach you unless you are a prior donor. If the fundraiser says you already pledged, stop and check.
Never let callers pressure you or rush you into making a donation. Scammers rush you so there’s no time to research their claims or think it through. A legitimate charity will be happy to get a donation at any time, so there's no rush. Take time to do your own research.
Search online for the charities' name plus the words “complaint,” “review,” “rating,” “fraud,” or “scam.” If you find bad reviews, it might be best to take a pass.
Check out the charity’s website. Be suspicious if you can’t find detailed information about a charity’s mission and programs.
If it is on social media or through crowdfunding, don’t assume the request is legitimate just because a friend posted it. People post things without reading them them all the time. If the link to donate goes to a crowdfunding campaign and money goes directly to the crowdfunding organizer, make sure that person will pass the money on to the cause you want to support.
BBB Wise Giving Alliance, Charity Navigator, GuideStar, and CharityWatch are organizations that help you research charities.
Confirm the charity is real. Ask the caller for the charity's exact name, website and mailing address, so you can confirm it later.
Don’t trust your caller ID. Technology makes it easy for scammers to fake caller ID information.
Charities have to tell you the name of the charity, and if the reason they’re calling is to seek a donation. Some scammers use names that sound like well-known charities to confuse and trick you - see this example.
Charities have to disclose their purpose. Watch out for sentimental claims with few details.
Check to see if the charity is registered with your state’s charity regulator if your state requires it, and confirm that the organization is registered with the IRS as a tax-exempt organization by looking it up in the IRS’s Tax Exempt Organization Search tool online.
Find out how much of your donation will go to the actual cause. Fundraising can be expensive, leaving the charity with little money to spend on its actual programs.
Ask the caller how much of your donation will go to the actual cause. Be suspicious if you hear vague sentimental claims without specifics about how your donation will be used. Call the organization directly to ask how much of your donation will go directly to the program you want to help.
Find out what else the charity spends money on. You can check the charity’s website and their financial reports for this information. Pay attention to how the organization spends its cash and the value of gifts-in-kind (donations of goods or services). If a charity is using gifts-in-kind to inflate its operations and spending most of its cash to pay executives or cover operating expenses, you may want to consider donating elsewhere.
Charity tax filings frequently contain self-reported information intentionally designed to frame the charity’s financial activities in the best possible light. Audited financial statements are more reliable sources of information since they are produced by third-party Certified Public Accountants (CPAs) and are required to disclose information such as fraud, problems with internal controls over a charity’s assets, related party transactions between the charity and the people running it, and other critical information that charities may exclude from self-reported documents like the IRS Form 990. For example, a charity’s reported program spending may contain millions of dollars paid to for-profit professional fundraisers for fundraising efforts like direct mail and telemarketing calls, or a charity may include millions of dollars worth of in-kind goods in its reported expenses, making it difficult to tell how efficiently their cash contributions will be used.
Be careful how you make the donation. It's safest to pay by credit card or check.
Don’t pay with wire transfers, gift cards or cryptocurrency. If the caller asks you to donate by wiring money or buying gift cards and sending them the codes, don’t do it. Scammers ask you to pay that way because these payment methods are hard to track.
If the caller guarantees you’ll win a prize or contest if you contribute, that’s a scam.
Review your bank and credit card statements. Make sure you’re only charged the amount you agreed to donate and that you’re not signed up for recurring donations if you didn't intend to.
If you find out that you sent money to a scammer instead of a charity, take action right away.
Contact your bank to dispute the charge.
Read the What To Do if You Were Scammed page on the Federal Trade Commission (FTC) website for additional advice on how to recover your money.
Report it your state charity regulator at https://www.nasconet.org/resources/state-government
File a report with the Federal Trade Commission (FTC) at ReportFraud.ftc.gov so they can use the information to build cases against scammers, spot trends, educate the public, and share data about what is happening in your community.
Watch the IRS VIDEO: IRS Phone Scams
Immigrant Fraud
IRS impersonators often use threats and intimidation to target groups with limited English proficiency. Recent immigrants are often the most vulnerable.
The IRS phone impersonation scam is still common. Scammers saying they are IRS employees try to scare immigrants by calling to demand immediate payment of tax bills through a pre-loaded debit card or wire transfer. The callers may threaten immigrants with deportation, arrest, or suspension of a driver’s or business license to get them to pay. If you receive one of these calls, do not feel pressured to pay a bill over the telephone. Ignore these threats and don't engage the scammers. Legitimate IRS employees will not threaten to revoke licenses or have a person deported. These are scare tactics used by scammers.
The IRS does not demand that people use a specific payment method, such as a prepaid debit card, gift card or wire transfer; ask for debit or credit card numbers over the phone; demand immediate tax payment; or threaten to bring in local police, immigration officers or other law enforcement to arrest people for not paying. Threats like these are common tactics scam artists use to trick victims into believing their schemes.
If you owe money, the IRS will almost always contact you with a letter first explaining what is owed and why; a way to contact them; and information about your rights as a taxpayer. You typically have the right to challenge the debt if you think it is wrong. If you are uncertain whether you owe the IRS money, you can call them at 1-800-829-1040 or go to the IRS website and View Your Tax Account Information to find out. If you owe taxes, review Paying Your Taxes on the IRS website for ways to either pay or make arrangements if you can't pay right away.
If you are a victim of an IRS phone scam, report it to the Treasury Inspector General for Tax Administration (TIGTA) by using their IRS Impersonation Scam Reporting form online or calling them at 800-366-4484, and to the IRS by emailing phishing@irs.gov with the subject line “ IRS Phone Scam ”.
Resources:
Multilingual Resources Available from the IRS
Schedule LEP Request for Change in Language Preference lets people choose the language they want to receive future communications in.
IRS Publication 17, Your Federal Income Tax, is now available in Spanish, Chinese simplified and traditional, Vietnamese, Korean and Russian.
Federal Trade Commission - Before Giving to a Charity
Report Phishing and Online Scams