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According to Johns Hopkins, the United States has confirmed nearly two million cases of COVID-19. With many businesses closed and taxpayers still waiting on stimulus checks, scammers are capitalizing on the shaky economic climate to cheat and steal. The Internal Revenue Service (IRS) is reminding taxpayers to be on guard against tax fraud and other related financial scams related to the pandemic.
Some COVID-19 related scams (like these) have been circulating for months. In particular, the IRS Criminal Investigation Division (IRS-CI) has been made aware of various schemes targeting Economic Impact Payments (EIPs, or stimulus checks). Some of these scams suggest that you can get more money from the government – or get your stimulus check faster – if you share personal details and pay a small “processing fee.” That’s not true: there are no shortcuts (paid or otherwise) to stimulus checks.
“Criminals seize on every opportunity to exploit bad situations, and this pandemic is no exception,” said IRS Commissioner Chuck Rettig. “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.”
IRS-CI has received reports of phishing schemes being sent via emails and texts and through the regular mail. These schemes use keywords like “Corona Virus,” “COVID-19,” and “Stimulus” and are an effort to get your personally-identifying information (PII) or financial account information. According to IRS-CI, most of the new schemes are actively playing on the fear and unknown of COVID-19, as well as concerns about the stimulus payments.
Driving some of these schemes? Rumors. They’re believable because there’s a thread of truth to them. For example, like many other tax professionals, I’ve been receiving numerous inquiries about a second stimulus check. There is no second stimulus check in the works. There has, however, been talk about a second stimulus package, and the House even passed the HEROES Act, which did include a proposal for an additional check. But, as of now, the Senate still hasn’t taken up the HEROES Act. That still hasn’t prevented folks from suggesting that there is a second check (again, there isn’t) and trying to convince others that they need to “apply” for a second check or otherwise take steps to secure one.
Criminal solicitations aren’t limited to stimulus checks. IRS-CI is also reporting the organized selling of fake at-home COVID-19 test kits, as well as offers to sell fake cures, vaccines, pills, and advice on unproven treatments. Other scams purport to sell large quantities of medical supplies through the creation of fake shops, websites, social media accounts, and email addresses where the criminal fails to deliver promised supplies after receiving funds. (I probably receive at least 10 or so such solicitations per day.)
“Criminals try to take advantage of our most vulnerable times and our most vulnerable populations. But because we have seen many of these criminals and schemes before, we know how to find them, and we know how to expose them,” said Don Fort, Chief of IRS Criminal Investigation. “And because COVID-19 is a global problem, it requires a global solution. Not only are we leveraging our financial investigative expertise domestically, we are working hand-in-hand with our J5 partners on those COVID-19 cases that cross borders. There truly is no place for criminals to hide.”
Other COVID-19 related scams involve setting up fake charities soliciting donations for individuals, groups, and areas affected by the disease. Remember that you always check on a tax-exempt organization’s federal tax status by using the IRS online tool here.
Some criminals also offer opportunities to “invest” early in companies working on a vaccine for the disease, which promises a dramatic return on investment. According to IRS-CI, these promotions are often styled as “research reports,” make predictions of a specific “target price,” and relate to micro-cap stocks, or low-priced stocks issued by the smallest of companies with limited publicly available information. Be wary of any company that reaches out to you directly about investments. The U.S. Securities and Exchange Commission (SEC) regulates how some companies can solicit funding (even certain kinds of crowdfunding), so if you’re not sure about the validity of an offer, ask for documentation and check with your legal advisor.
You can report COVID-19 scams to the National Center for Disaster Fraud (NCDF) Hotline at 1.866.720.5721 or through the NCDF web Complaint Form. The NCDF works within the Department of Justice’s Criminal Division to improve the detection, prevention, investigation, and prosecution of criminal conduct related to natural and man-made disasters and other emergencies, such as COVID-19. Hotline staff will obtain information regarding your complaint, which will then be reviewed by law enforcement officials.
You can also report fraud or theft of your stimulus to the Treasury Inspector General for Tax Administration (TIGTA) via their website.
Finally, you can use always report phishing attempts to the IRS. If you receive an unsolicited email or social media attempt that appears to be from the IRS or an organization linked to the IRS (like the Electronic Federal Tax Payment System, or EFTPS), you should forward it to phishing@irs.gov.
If in doubt, assume it’s a scam. Don’t engage with scammers - even if you think you have the upper hand.