Summertime, despite what the song says, is not easy if you are the target of a tax scam.
And that's increasingly likely this season, says the Internal Revenue Service.
The tax agency is urging people to be on the lookout for a summer surge of tax scams. Identity thieves are sending a barrage of email and text messages promising tax refunds or offers to help fix tax problems.
Neither the good (possible cash back from Uncle Sam) nor the bad (tax troubles) exist. They are just the latest ploys, targeting individual and business taxpayers, that crooks are using to try to trick their marks into revealing sensitive personal, financial, and tax information.
"The IRS is seeing a wave of these summer scams relentlessly pounding taxpayers," said IRS Commissioner Danny Werfel. "People are being flooded with these email and text messages, but we want them to avoid getting swept up in these terrible scams. Taxpayers should be wary; remember, don't click on links from questionable sources."
Here are the five schemes that are most prevalent this summer.
The Economic Impact Payment (EIP) scheme
This is currently the highest volume email scheme the IRS is seeing. The IRS routinely sees hundreds of taxpayers forwarding these messages each day; the IRS has seen thousands of these emails reported since the July 4 holiday period.
These scam emails messages are hitting inboxes with subject lines such as "Third Round of Economic Impact Payments Status Available."
If you get such an email, immediately ignore it. While Economic Impact Payments (EIPs) were real business benefits created during the COVID-19 pandemic, the third round was sent out in 2021, more than two years ago.
Scam artists are always looking for new ways to adjust their message to trick people. That's the case in this EIP phishing scam, since the coronavirus-prompted stimulus payments ended long ago.
In addition to using a tax break that's no longer around, also be on the lookout for other scam red flags.
As with many tax phishing messages, the EIP scam emails are routinely riddled with spelling errors and factual inaccuracies.
Another indicator that an unsolicited email is a scam is the use of external links. In this case, the EIP scam email urges the recipient to click an included link in order to complete their "application." Instead, it takes the taxpayer to a website where identity thieves will try to harvest valuable personal information.
The misleading "You may be eligible for the ERC" claim
The IRS has seen a significant increase in false Employee Retention Credit (ERC) claims. In fact, false ERC claims have been so widespread this year, the IRS added the scam to its annual Dirty Dozen list, which I examined in my post Dirty Dozen tax scam list for 2023 has old & new schemes.
This scam also made the ol' blog in my post Business owners should look carefully at ERC promotions.
The ERC, sometimes also called the Employee Retention Tax Credit or ERTC, is a pandemic-related credit for which only select employers qualify. ERC scam promoters are luring people to improperly claim the tax credit with "offers" online, in social media, on the radio, or through unsolicited phone calls, and emails.
Some of the scam mailings look like official government letters, but have fake agency names and usually urge immediate action. These unscrupulous promoters make false claims about their company's legitimacy and often don't discuss some key eligibility factors, limitations, and income tax implications that affect an employer's tax return.
One scam warning sign is a when promoters say they can quickly determine someone's eligibility without details. Not true. Other warning signs are up-front fees or a fee based on a percentage of the ERC claimed.
If you fall for this scam and improperly claim the ERC, you must pay it back, possibly with penalties and interest.
Employers eligible for the ERC should work with a trusted tax professional. Details about eligibility, how to properly claim the credit, and how to report questionable promoters are available at the IRS.gov webpage Employee Retention Credit.
The "Claim your tax refund online" scheme
Identity thieves know that the concept of free or overlooked money is tempting. That's why the IRS routinely sees email and text schemes playing off tax refunds and suggesting people have somehow missed getting their tax refund.
A variation hitting inboxes in recent weeks has a blue headline proclaiming people should "Claim your tax refund online."
Again, there are telltale warning signs, including misspellings and urging people to click a link for help to "claim tax refund." Here's one example:
We cheked an error in the calculation of your tax from the last payment, amounting to $ 927,22. In order for us to return the excess payment, you need to create a E-Refund after which the funds will be credited to your specified bank. Please click below to claim your tax refund. If we are unable to complete within 3 days, all pending will be cancelled."
The "Help You Fix-It" text scheme
In another text scam seen in recent weeks, identity thieves come up with a name on a text message that tries to sound official, like "govirs-accnnt2023."
They then send a variety of messages that say there's a problem with a person's tax return but, not to worry, the anonymous sender of the text message can help resolve the problem. All you have to do is click on a link in the text. Don't.
Other warning signs in these text messages are misspellings and factual inaccuracies.
The "Delivery Service" scam at your door
One of the newest scams this year is a new scam paper mailing that tries to mislead people into believing they are owed a refund.
The fake correspondence arrives in a cardboard envelope from a delivery service. The enclosed letter includes the IRS masthead and wording that the notice is "in relation to your unclaimed refund."
You can read more about this scheme in my post Tax scammers hard at work with new fake IRS mailing.
Report any scams: If you as an individual taxpayer or business filer receive any type of scam message, report them.
Email scams should be sent to [email protected]. The IRS says you can simply forward the message, but it help IRS cybersecurity experts more if you send the full email header to help them identify the scheme.
The IRS.gov Report Phishing and Online Scams page provides complete details.
You also can report scams to the Treasury Inspector General for Tax Administration (TIGTA) or the Internet Crime Complaint Center. The Federal Communications Commission's (FTC's) Smartphone Security Checker also is a useful tool against mobile security threats.
- Don't ignore tax identity theft letters from IRS
- Tips if the IRS audits your business' ERC claim
- New W-2 scams are popping up this tax filing season
Tax Felon Friday: When the IRS catches and convicts the people running these summer tax scams, they will be prime candidates for the ol' blog's new end-of-week feature, Tax Felon Friday.
You can read more tax crime posts, including those that were published long before I gave them a special designation, in the, what else, tax crimes category.
You'll find this post at the top of that category right now, so just scroll down for more.
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