Don't Mess With Taxes

Updated Tuesday, July 9, 2024

Residents whose lives are disrupted by a major disaster are targets. So are those who want to help. Either way, don’t become a victim.

Hurricane Beryl, the second named storm of the 2024 tropical storm season, made her third landfall early today along the Texas Gulf Coast.

The good news is that Beryl was a category 1 when it blasted into the Lone Star State. That's far less powerful than the category 5 it reached on its travel through the Caribbean and Gulf of Mexico. The bad news is that Beryl was still a hurricane.

At least seven people have died in the greater Houston area. Millions are without power. Homes are flooded. Some homes are gone because of tornadoes that hide in hurricane storm bands.
 

 
Now people face rebuilding. Unfortunately, some of the folks who offer help here are crooks. Scammers also target those far from disaster areas, but who want to help by contributing to recovery efforts.

Here are some tips from the Federal Trade Commission (FTC), Federal Bureau of Investigation, Federal Emergency Management Agency (FEMA), Internal Revenue Service (IRS), and me, who lived through a couple of hurricanes and several tropical storms while residing in South Florida.

General disaster scam warnings: Scam attempts come by phone, mail, email, text, or in person. So be careful about any disaster-related contacts, especially soon after a storm when people who’ve sustained damages and losses are particularly vulnerable.

Some of the unscrupulous outreach comes from one-off attempts to get your money, such as individuals offering debris clearing or roof and other home repair services.

Some con artists impersonate federal agents, purporting to help with recovery. Note that federal and state workers always carry identification badges. These government workers also never ask for, or accept, money.

There is no fee required to apply for, or to get, federal disaster assistance. There is never a fee for FEMA home inspections.

As for tax relief, beware anyone saying they are working for, or on behalf of, the IRS, and can help victims file casualty loss claims and get tax refunds. They aren’t with the IRS, and they can’t help. The IRS doesn’t do this kind of personal disaster outreach.

Other disaster scams are attempts to steal victims’ identities. This will prolong your hassles long after the disaster.

The key here is to not be rushed, whether you’re a person needing post-disaster help or someone who wants to help those who’ve gone through the disaster.

Stay tuned to local media and trusted local and federal social media for current updates about ongoing disasters and tips on fraud prevention.

If something makes you feel uncomfortable, check with FEMA or local law enforcement to ensure you don’t become a scam victim.

Since disasters strike across the country year-round, criminals have plenty of opportunities to try out and refine their schemes. Here are some of the more common post-disaster scams officials (and victims) tend to encounter.

Home repair, clean-up services. Be skeptical of ostensible repair crews that tend to promise immediate help. Some may quote outrageous prices, demand payment up-front, or lack the skills needed. Others will offer a discount, but only if you sign a contract immediately. They often claim they don’t need to be licensed to do the work; in most jurisdictions, they do need that government imprimatur.

Phony housing inspectors also pop up after disasters, claiming to represent federal or local government agencies who need to inspect damage. Ask to see the inspector’s identification badge. All FEMA personnel and contractors will have official laminated photo identification. Housing inspectors have each applicant’s nine-digit registration number. Legitimate inspectors will not request money to complete an inspection.

Rental listing scams. If you can’t safely return to your home after a disaster, you need somewhere to stay. So do all your neighbors and thousands in the surrounding area. But don’t be pressured into taking a place without check first. And steer clear of people who tell you to wire money or ask for security deposits before you’ve met or signed a lease.

Scammers copy the pictures and descriptions of online rental listings, replace the agent’s contact information with their own, and post the phony ads on a new, fake site. If you call or email about the rental you’ll reach a scammer.

Search online for the rental location’s address, together with the name of the property owner or rental company. If other ads come up for the same address, but with a different owner or rental company name, that’s a sign of a scam. Look for the name of the rental company and search the rental company’s website yourself to see if the property is listed there too. If it isn’t, the ad you found may be a scam.

Atypical payment methods. In addition to pressing for quick payment, scammers often insist you pay in certain ways. This includes by wire transfer, gift card, payment app, cryptocurrency, or in cash. These make it easier for the scammer to take the money and run. And never make the final payment until the work is done and you’re satisfied.

If you paid with a credit card and the work wasn’t completed (or even started), contact the card issuer and tell them it was a fraudulent charge. Ask them to reverse the transaction and give you your money back.

If, however, you paid a scammer by cash or a less common method, once it’s gone, you probably can’t get it back. However, it doesn’t hurt to try. The FTC has additional information on ways to try to get your money back if you used other methods to pay a scammer.

Added information requests. A big red flag at any time is when someone asks for personal information to complete a transaction. This often happens when scammers make contact online. As with any such unsolicited contacts, practice good cyber hygiene:

• Don't click links or open email attachments from someone you don't know.
• Manually type out links instead of clicking on them.
• Don't provide any personal information in response to an email, robocall, or robo-text.
• Check the website's address carefully. Crooks often use layouts or URLs that are close to legitimate operations.
• Don’t ever share your bank account or Social Security number or account usernames and passwords.

Charitable gift solicitations: The worst situations bring out the worst people, like scammers trying to make a quick profit off others’ misfortune. I go into detail in Don't fall for disaster charity scams, but below are a few highlights from that post.

Don't immediately donate. Yes, time is of the essence in getting help to those in need. But acting on the first donation options you see could send your money to crooks, rather than to those in need.

Check out the charities. The IRS' online Exempt Organizations Select Check will let you know whether the group has met federal tax law requirements to be registered as a 501(c)(3) public charity. Private groups also vet charities. They include Charity Navigator; Candid, which is the combined effort of GuideStar and Foundation Center; the Better Business Bureau's Wise Giving Alliance; and Charity Watch.

Be cautious of crowdfunding. This is a popular way to raise money for good causes. Even some government agencies use this option. But the distant, online nature of crowdfunding makes it easy for crooks to steal your money using the guise of a good cause.

Report the fraud: If a con artist catches you in a moment of weakness, don’t beat yourself up, especially considering what you’ve gone through. But do report the incident if you're a victim of disaster-related fraud or know about such incidents.

Start by contacting your state consumer protection office or state attorney general.

Report the fraud to federal officials, too, including the FBI at tips.fbi.gov. Report online fraud to the FBI's Internet Crime Complaint Center (IC3).

The FTC’s online fraud reporting tool, which shares the information with other law enforcement agencies.

If you question the validity of a contact, or suspect fraud, call the FEMA Disaster Fraud Hotline toll-free at (866) 720-5721.

For questions about disaster tax relief, you can call the IRS toll-free disaster help line at (866) 562-5227. Phone assistors will answer questions about tax relief or disaster-related tax issues.

You can report suspected disaster-related fraud to the National Center for Disaster Fraud.

You also might find these items of interest:

• 6 tax donation deduction tips
• Ways to avoid local and global charity scams
• Storm Warnings collection of disaster tax relief pages

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