IRS warns of coronavirus-related tax schemes

The Internal Revenue Service is warning taxpayers and tax professionals once again to beware of tax fraud and other related financial scams related to the COVID-19 pandemic.

In recent months, the IRS’s Criminal Investigation unit has noticed various scams related to economic impact payment and other financial schemes attempting to take advantage of unwary taxpayers. IRS criminal investigators are working with law enforcement authorities in the U.S. and overseas to educate taxpayers about the schemes and stop the criminals from perpetrating them during the pandemic. The IRS issued an earlier warning in April (see story).

“Criminals seize on every opportunity to exploit bad situations, and this pandemic is no exception,” said IRS Commissioner Chuck Rettig (pictured) in a statement Monday. “The IRS is fully focused on protecting Americans while delivering Economic Impact Payments in record time. The pursuit of those who participate in COVID-19 related scams, intentionally abusing the programs intended to help millions of Americans during these uncertain times, will long remain a significant priority of both the IRS and IRS-CI.”

The IRS is also working at the state level to stop the scammers. “As the Special Agent in Charge for IRS Criminal Investigation here in New Jersey, it is vitally important for my office to convey important information to the taxpayers of New Jersey to help protect their finances, so they do not fall victim to criminals looking to take advantage of them,” said Michael Montanez, special agent in charge of IRS Criminal Investigation’s Newark Field Office, in a statement.

Other coronavirus-related scams involve setting up fake charities soliciting donations for individuals, groups and areas affected by COVID-19. Some fraudsters are offering opportunities to invest early in companies supposedly working on a vaccine for the disease, promising that the “company” will dramatically increase in value as a result. These promotions are often labeled as “research reports,” make predictions of a specific “target price,” and tout microcap stocks, or low-priced stocks issued by the smallest of companies with limited publicly available information.

Finally, IRS CI has also detected a huge increase in phishing schemes using emails, letters, texts and links. These phishing scams are relying on keywords such as “Corona Virus,” “COVID-19,” and “Stimulus” in different ways. Cybercriminals are bombarding large numbers of people with the messages in an attempt to elicit personally identifiable information or financial account details, such as account numbers and passwords. Most of the new schemes are exploiting the many fears and unknowns about the virus and confusion over the stimulus payments.

Coronavirus-related (COVID-19) scams should be reported to the National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or sent through the NCDF web Complaint Form. The NCDF is a national coordinating agency within the Justice Department’s Criminal Division aimed at improving the detection, prevention, investigation and prosecution of criminal conduct related to natural disasters and emergencies such as COVID-19. Hotline staff will ask for information about the complaint, which will then be reviewed by law enforcement.

Taxpayers can also report fraud or theft of their economic impact payments to the Treasury Inspector General for Tax Administration online. TIGTA investigates attempts to corruptly interfere with federal tax administration, including IRS-related coronavirus scams.

Taxpayers can always report phishing attempts to the IRS. Recipients of unsolicited emails or social media efforts to gather information that appear to come from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), should forward it to phishing@irs.gov. The IRS is warning taxpayers not to communicate with potential scammers online or by phone.