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Tax Relief Scams to Avoid: 2021 Edition

Just a few months ago, the world slowly began to open up after the COVID-19 pandemic. However, we are now in the middle of 2021 and it looks like the pandemic shows no signs of stopping. Now more than ever, people are experiencing financial instability and insecurity - leaving room for schemers and scammers looking to take advantage of desperate individuals who need some relief.

We compiled a list of the Top Tax Scams to look out for!

We have sourced our information directly from the Internal Revenue Service (IRS) and the Attorney General. This information is helpful for taxpayers, tax professionals such as CPA's and tax attorneys, and financial institutions to lookout for as scams and schemes are on the rise.

Economic Impact Payment Theft:

A continuing threat to individuals 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.

Taxpayers should remember that the IRS website, IRS.gov, is the agency's official website for information on payments, refunds and other tax information. A tax attorney CANNOT help you with stimulus checks or the Child Tax Credit.

Unemployment fraud and inaccurate taxpayer 1099-Gs:

Because of the COVID-19 pandemic, many taxpayers lost their jobs and received unemployment compensation from their state. However, scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made on these fraudulent 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.

Scammers trying to Exploit the Child Tax Credit:

An estimated 36 million families will continue to receive payments from the Internal Revenue Service of up to $300 per child, per month. Florida Attorney General Ashley Moody said, “Anytime the federal government is doling out huge amounts of money, scammers pounce—trying to make a quick, dishonest dollar. With this latest round of federal stimulus money slated to be distributed, parents should be on the lookout for scams.”

Attorney General Moody is asking eligible families to stay informed about the payment schedule to avoid scams and to seek out verified sources of information, such as the IRS, to stay up to date. The following tips will also help Floridians spot and avoid scams related to the Child Tax Credit payments:

  • Eligible families will receive payments automatically and do not have to sign up or register for Child Tax Credit payments;
  • The IRS will never randomly call, text, email or direct message anyone asking for money or personal information. If asked, hang up immediately and directly contact the business or agency that the fraudster was impersonating;
  • The IRS will never ask for payment via gift card, wire transfer or cryptocurrency; and
  • Any offers to speed up the delivery time of a Child Tax Credit payment is a scam.

Vulnerable Populations - The Elderly and Immigrants:

This usually involves someone calling and impersonating a government employee, like an IRS or ICE Agent, and threatening fines, revocation of a driver’s license or immigration status, or even jail time, unless the person makes an immediate cash payment. Remember, the IRS like most government agencies, will always contact you in writing by mail and never by phone. Regardless of how threatening  (or helpful) they seem, hang up and contact someone your trust.

Another scam that has been circulating the past several years specifically targets the elderly. A scammer will impersonate a loved one such as a grandchild or daughter who is suddenly in desperate need of money. Eerily uncanny, the voice on the phone sounds just like your loved one and will be very convincing. The elderly community have been conned out of hundreds of thousands of dollars with this scheme, but authorities say there are steps you can take to prevent this from happening. Authorities advise elderly grandparents to have an agreed upon "safe word" that family members are aware of and keep secret. Next time a suspicious call is received from a loved one asking for money in a circuitous way, ask them to recite the safe word.

"Ghost" Tax Return Preparers:

These are “ghosts,” who are paid to prepare the return but refuse to sign as a paid preparer and do not have a PTIN, the Preparer Tax Identification Number issued by the IRS. These ghost tax return preparers often require payment in cash only and will not provide a receipt, invent income to qualify their clients for tax credits, claim fake deductions to boost the size of the refund and direct your refunds into their bank account, not yours account.

Stay vigilant against scammers, hire a Tax Attorney!

It's a serious red flag when you hire a company that ONLY cares about your financial present and how much money they can currently obtain from you. A true financial ally will not only look at your financial present but your financial past as well and help you build a strong foundational plan to ensure a stable financial future. GETATAXLAWYER.COM are your allies when it comes to battling against the IRS and tax preparation. Give us a call, we can help you out. 1.800.290.8160

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