The IRS’s 2021 ‘Dirty Dozen’ Tax Scams: Pandemic-Related Scams

July 18th, 2021

Every year, the IRS releases its “Dirty Dozen” — a list of 12 prominent or up-and-coming tax scams that Americans should keep a close eye on. And 2021’s list is finally here.

The IRS is parceling out this year’s Dirty Dozen, focusing on a few tax scams in each of four broader themes that we’ll cover in detail. Some of the themes — such as phishing or charity-related scams — have been around for some time. But we’ll start our Dirty Dozen series with the most recent, timely topic: pandemic-related scams.

“We continue to see scam artists use the pandemic to steal money and information from honest taxpayers in a time of crisis,” IRS Commissioner Chuck Rettig says in a press release.

The Dirty Dozen: Pandemic-Related Tax Scams

The IRS highlights two common tax scams associated with the COVID-19 pandemic.

Economic Impact Payment theft

Washington authorized three different stimulus payments in roughly a year, starting with the Coronavirus Aid, Relief and Economic Security (CARES) Act in March 2020, and ending with the American Rescue Plan in March 2021.

These stimulus payments, known as Economic Impact Payments (EIPs), are all but completely distributed, but taxpayers should nonetheless keep a watch out for scams related to these checks.

Specifically, the IRS is warning that “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,” are tell-tale signs. For one, the IRS automated the vast majority of EIPs, but also, the IRS typically doesn’t initiate contact by phone, email, text or social media and ask for Social Security numbers and other highly sensitive information.

And while most EIPs have already been delivered, the IRS warns people to watch out for mailbox theft as well. The agency notes that you should report any suspected mail losses to postal inspectors. To do so, you can call 877.876.2455 or visit www.uspis.gov.

Unemployment fraud leading to inaccurate taxpayer 1099-Gs

The pandemic also caused mass unemployment. By April 2020, the U.S. recorded an unemployment rate of 14.8% — the highest such figure since the government began collecting data back in 1948.

The result? Tens of millions of Americans became eligible for (and received) both state unemployment benefits and supplemental federal unemployment benefits.

But they weren’t the only ones.

Scammers also siphoned off unemployment funds — by using stolen personal information to fraudulently file on behalf of regular taxpayers. Those taxpayers never saw a dime, of course, as that money went directly to scammers.

How do you know whether your info was used for one of these schemes? The IRS says you would receive a Form 1099-G reporting unemployment compensation that you didn’t receive. If that’s the case, taxpayers should contact their appropriate state agency so they can receive a corrected form. You can also visit www.DOL.gov/fraud to learn more.

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If you’re an individual taxpayer, you can find plenty of useful information on our blog. McManamon & Co. also offers a wide array of services to small and midsize businesses, including tax services such as filing, planning and compliance.

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