IRS releases 2021 ‘Dirty Dozen’ list of scams and schemes

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WASHINGTON, DC – APRIL 15: The Internal Revenue Service (IRS) building stands on April 15, 2019 in Washington, DC. April 15 is the deadline in the United States for residents to file their income tax returns. (Photo by Zach Gibson/Getty Images)

WASHINGTON (NEWS10) — The Internal Revenue Service (IRS) Tuesday released its 2021 “Dirty Dozen” list warning taxpayers, tax professionals, and financial institutions to be wary of these 12 scams and schemes.

The IRS says the 2021 “Dirty Dozen” list will be broken down into four separate categories including:

  • Pandemic-related scams like Economic Impact Payment theft
  • Personal information cons including phishing, ransomware and phone ‘vishing’
  • Ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud
  • Schemes that persuade taxpayers into unscrupulous actions such as Offer In Compromise mills and syndicated conservation easements.

The IRS reportedly compiled the list into these categories based on who continues the schemes and who they impact. In addition to Tuesday’s scams, the IRS says it will highlight other schemes over the next three days.

“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 people is from identity thieves who try to steal Economic Impact Payments (EIPs), also known as stimulus payments. Most eligible people will get their payments automatically from the IRS. Taxpayers should watch out for these tell-tale signs of a scam:

  • Any text messages, random incoming phone calls or emails inquiring 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. Frequently check mail 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.

Unemployment fraud leading to inaccurate taxpayer 1099-Gs

Due to the COVID-19 pandemic, many people lost their jobs and received unemployment benefits from their state. However, the IRS says scammers also took advantage of the pandemic by filing false claims for unemployment compensation using stolen personal information of people who had not filed claims. The payments made on the false claims went to the identity thieves.

The IRS reminds taxpayers to be on the lookout for receiving a Form 1099-G reporting unemployment compensation that they didn’t receive. For people in this situation, the IRS urges them to contact their appropriate state agency for a corrected form. If a corrected form cannot be obtained so that a taxpayer can file a timely tax return, taxpayers should complete their return claiming only the unemployment compensation and other income they actually received. See Identity Theft and Unemployment Benefits for tax details and for state-by-state reporting information.

Additional protection to help protect taxpayers

  • IRS makes IP PINs available to all taxpayers – adding another layer of security To help taxpayers avoid identity theft, the IRS this year made its Identity Protection PIN (IP PIN) program available to all taxpayers. Previously it was available only to victims of ID theft or taxpayers 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, in essence, a way to lock a tax account. The IP PIN serves as the key to opening that account. Electronic returns that do not contain the correct IP PIN will be rejected and paper returns will go through additional scrutiny for fraud.

Reducing fraud

The IRS and its Security Summit partners in the states and the private-sector tax community have made changes to help reduce identity theft-related refund fraud that are noticeable to the average person filing a return:

  • Tax software providers agreed to strengthen password protocols. This is the first line of defense for these companies 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 can help

The IRS says it is important for taxpayers filing in 2021 to know that online tax software products available to both taxpayers and tax professionals 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 sent to a mobile phone in addition to the username and password used to access the account.

The IRS and its Security Summit partners have formed an information sharing center that allows them to quickly identify emerging scams and react to protect taxpayers. The Identity Theft Tax Refund Fraud Information Sharing and Analysis Center is now operational.

Also, check out the IRS’ recent A Closer Look column for more on how to be vigilant about tax scams. Visit Identity Theft Central and Tax Fraud Alerts for more information on how to protect against or report identity theft or fraud.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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