More ‘Dirty Dozen’: Tax refund theft and fake charity appeals

By Paul Bonner

Common ploys by which thieves con taxpayers out of their tax refunds figured among this year's second installment Monday of the IRS's "Dirty Dozen" warnings.

IRS News Release (IR-2022-117) follows last week's first installment, which highlighted four purported tax-saving schemes offered by promoters who misrepresent tax laws but that could result in taxpayers' being denied the claimed benefits.

Monday's release, by contrast, echoed warnings in previous Dirty Dozen lists and throughout the year, as the IRS highlighted risks that include tax identity theft and consequent larceny of tax benefits. These hazards can arise from within social media, emails, texts, and telephone calls, the IRS said. Generally, such scams have proliferated during the COVID-19 pandemic, the IRS said.

"Caution and awareness are our best lines of defense against these criminals" who steal tax refunds, IRS Commissioner Charles Rettig was quoted as saying. Rettig also urged taxpayers to check out any gambits they might receive or come across by doing their own research on irs.gov.

Economic impact payment and tax refund scams

The IRS noted that it has issued all authorized economic impact payments, also known as stimulus payments, and that most eligible taxpayers have already received them. Taxpayers who were eligible for one and did not receive it could claim a rebate recovery credit on their 2020 or 2021 federal income tax return.

Some telltale signs of an economic impact payment scam include any text message, unexpected phone call, or email that asks a taxpayer to provide or verify bank account information. The IRS does not initiate taxpayer contact by phone, email, text, or social media asking for a Social Security number or other personal or financial information, the IRS said, repeating a frequent caution.

Unemployment fraud and inaccurate Forms 1099-G

A Form 1099-G, Certain Government Payments, reporting unemployment benefits a taxpayer did not receive, or more benefits than received, may be evidence that someone fraudulently filed for state unemployment benefits using the taxpayer's personal information. Affected taxpayers should contact their appropriate state agency for a corrected form. If one cannot be obtained, they should complete their federal income tax return claiming only the unemployment compensation, if any, that they did receive. More information on state reporting of unemployment fraud is available at the U.S. Department of Labor's website.

Bogus employment offers

Job postings on social media may be fake, a lure to entice taxpayers to provide their personal and financial information and thence to become victims of tax identity fraud and refund theft, the IRS warned.

Fake charities

Just as the need for assistance has grown during the pandemic, so have opportunists preying on the impulses of individuals desiring to donate, the IRS said.

Red flags include a caller who exerts pressure for a donation, the IRS said.

"A legitimate charity will be happy to get a donation at any time, so there's no rush" to donate before doing some research, the release stated. The caller should be ready to provide the organization's exact name, website, and mailing address.

The Service offered its Tax Exempt Organization Search tool in this regard. Another recommended resource is the Federal Trade Commission's website.

Yet another red flag is a request to pay a donation by gift card or wire, the IRS said, suggesting that a credit card payment or check is safer.

— To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.

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