Wednesday, June 30, 2021

IR-2021-143: IRS: Families receiving monthly Child Tax Credit payments can now update their direct deposit information

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Issue Number:    IR-2021-143

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IRS: Families receiving monthly Child Tax Credit payments can now update their direct deposit information

WASHINGTON — The Internal Revenue Service today upgraded a key online tool to enable families to quickly and easily update their bank account information so they can receive their monthly Child Tax Credit payment.

The bank account update feature was added to the Child Tax Credit Update Portal, available only on IRS.gov. Any updates made by Aug. 2 will apply to the Aug. 13 payment and all subsequent monthly payments for the rest of 2021.

Families will receive their July 15 payment by direct deposit in the bank account currently on file with the IRS. Those who are not enrolled for direct deposit will receive a check. The IRS encourages people without current bank account information to use the tool to update their information so they can get the payments sooner.

The IRS also urges people to be on the lookout for scams related to the Child Tax Credit. People who need to update their bank account information should go directly to the IRS.gov site and not click on links received by email, text or phone.

How to update direct deposit information

First, families should use the Child Tax Credit Update Portal to confirm their eligibility for the payments. If eligible, the tool will also indicate whether they are enrolled to receive their payments by direct deposit.

If so, it will list the full bank routing number and the last four digits of their account number. This is the account that will receive their July 15 payment, and if they don't change the account, all future payments will go there as well.

Next, if they choose, they can change the bank account receiving the payment starting with the Aug. 13 payment. They can do that by updating the routing number and account number and indicating whether it is a savings or checking account. Note that only one account number is permitted for each recipient—that is, the entire payment must be direct deposited in only one account.

How to switch from paper check to direct deposit

If the Update Portal shows that a family is eligible to receive payments but not enrolled to receive direct deposits, they will receive a check each month. If they want to switch to receiving their payments by direct deposit, they can use the tool to add their bank account information. They do that by entering their bank routing number and account number and indicating whether it is a savings or checking account.

The IRS urges any family receiving checks to consider switching to direct deposit. With direct deposit, families can access their money more quickly. Direct deposit removes the time, worry and expense of cashing a check. In addition, direct deposit eliminates the chance of a lost, stolen or undelivered check.

Families can stop payments anytime

Even after payments begin, families can stop all future monthly payments if they choose. They do that by using the unenroll feature in the Child Tax Credit Update Portal. Eligible families who make this choice will still receive the rest of their Child Tax Credit as a lump sum when they file their 2021 federal income tax return next year.

To stop all payments starting in August and the rest of 2021, they must unenroll by Aug. 2, 2021.

For more information about the unenrollment process, including a schedule of deadlines for each monthly payment, see Topic J  of the Child Tax Credit FAQs on IRS.gov.

Who should unenroll?

Instead of receiving these advance payments, some families may prefer to wait until the end of the year and receive the entire credit as a refund when they file their 2021 return. The Child Tax Credit Update Portal enables these families to quickly and easily do that.

The unenroll feature can also be helpful to any family that no longer qualifies for the Child Tax Credit or believes they will not qualify when they file their 2021 return. This could happen if, for example:

  • Their income in 2021 is too high to qualify them for the credit.
  • Someone else (an ex-spouse or another family member, for example) qualifies to claim their child or children as dependents in 2021.
  • Their main home was outside of the United States for more than half of 2021.

What is the Child Tax Credit Update Portal?

The Child Tax Credit Update Portal is a secure, password-protected tool, available to any eligible family with internet access and a smart phone or computer. It is designed to enable them to manage their Child Tax Credit accounts.  Right now, this includes updating their bank account information with the IRS or unenrolling from monthly payments. Soon, it will allow people to check on the status of their payments. Later this year, the tool will also enable them to make other status updates and be available in Spanish.

To access the Child Tax Credit Update Portal, a person must first verify their identity. If a person has an existing IRS username or an ID.me account with a verified identity, they can use those accounts to easily sign in. People without an existing account will be asked to verify their identity with a form of photo identification using ID.me, a trusted third party for the IRS. Identity verification is an important safeguard and will protect the user's account from identity theft.

Anyone who lacks internet access or otherwise cannot use the online tool may unenroll by contacting the IRS at the phone number included in the outreach letter they received from the IRS.

Who is getting a monthly payment?

In general, monthly payments will go to eligible families who:

  • Filed either a 2019 or 2020 federal income tax return.
  • Used the Non-Filers tool on IRS.gov in 2020 to register for an Economic Impact Payment.
  • Registered for the advance Child Tax Credit this year using the new Non-Filer Sign-Up Tool on IRS.gov.

An eligible family who took any of these steps does not need to do anything else to get their payments.

Normally, the IRS will calculate the advance payment based on the 2020 income tax return. If that return is not available, either because it has not yet been filed or it has not yet been processed, the IRS is instead determining the payment using the 2019 tax return.

Eligible families will receive advance payments, either by direct deposit or check. Each payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17. The IRS will issue advance Child Tax Credit payments on these dates: July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15.

Tax returns processed by June 28 will be reflected in the first batch of monthly payments scheduled for July 15.

Taxpayers will receive several letters

Taxpayers will also receive several letters related to the Child Tax Credit. In the next few weeks, letters are going to eligible families who filed either a 2019 or 2020 federal income tax return or who used the Non-Filers tool on IRS.gov to register for an Economic Impact Payment. The letters will confirm their eligibility, the amount of payments they'll receive and that the payments begin July 15. Families who receive these letters do not need to take any further action. The personalized letters follow up on the Advance Child Tax Credit Outreach Letter, sent in early- and mid-June, to every family who appeared to qualify for the advance payments.

Child Tax Credit 2021

The IRS has created a special Advance Child Tax Credit 2021 page, designed to provide the most up-to-date information about the credit and the advance payments. It's at IRS.gov/childtaxcredit2021.

Among other things, it provides direct links to the Child Tax Credit Update Portal, as well as two other online tools −the Non-filer Sign-up Tool and the Child Tax Credit Eligibility Assistant, a set of frequently asked questions and other useful resources.

Child Tax Credit changes

The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for children ages 6 through 17. Before 2021, the credit was worth up to $2,000 per eligible child.

The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:

  • $75,000 or less for singles,
  • $112,500 or less for heads of household and
  • $150,000 or less for married couples filing a joint return and qualified widows and widowers.

For most people, modified AGI is the amount shown on Line 11 of their 2020 Form 1040 or 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every $1,000 in modified AGI. In addition, the credit is fully refundable for 2021. This means that eligible families can get it, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.

For the most up-to-date information on the Child Tax Credit and advance payments, visit Advance Child Tax Credit Payments in 2021.

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IR-2021-141SP: Lista de estafas tributarias “Docena Sucia” del IRS advierte a personas a tener cuidado con estafas relacionadas con impuestos que involucran organizaciones benéficas falsas, preparadores fantasmas y otros esquemas

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Consejos Tributarios del IRS 30 de junio de 2021

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Edición Número:    IR-2021-141SP

En Esta Edición


Lista de estafas tributarias "Docena Sucia" del IRS advierte a personas a tener cuidado con estafas relacionadas con impuestos que involucran organizaciones benéficas falsas, preparadores fantasmas y otros esquemas

Agencia les recuerda a personas de la tercera edad e inmigrantes a tener cuidado con depredadores

WASHINGTON — El Servicio de Impuestos Internos continuó hoy sus estafas tributarias de la "Docena Sucia" con una advertencia a las personas para que tenga cuidado con los depredadores que usan esquemas relacionados con impuestos que van desde organizaciones benéficas falsas hasta estafas dirigidas a personas de la tercera edad e inmigrantes.

El IRS continúa viendo un grupo de artimañas por parte de personas deshonestas que engañan a otros para que hagan algo ilegal o que finalmente les cause daño. Los depredadores pueden animar a una persona honesta a hacer algo que no se dan cuenta de que es ilegal o pueden aprovecharse de su buena voluntad para quitarles algo.

Algunas estafas involucran a estafadores que se dirigen a grupos como personas de la tercera edad o inmigrantes, haciéndose pasar por organizaciones benéficas falsas o por oficiales del IRS, cobrando tarifas excesivas por ofrecimientos de transacción, realizando fraudes de seguro de desempleo y preparando declaraciones de impuestos inescrupulosamente.

Aquí hay cinco de las estafas de este año de la "Docena Sucia".

Organizaciones benéficas falsas

El IRS aconseja a los contribuyentes estar atentos a estafadores que crean organizaciones benéficas falsas para aprovechar la generosidad del público. Se aprovechan especialmente de las tragedias y los desastres, como la pandemia de COVID-19.

Las estafas que solicitan donaciones para los esfuerzos de ayuda en casos de desastre son especialmente comunes por teléfono. Los contribuyentes siempre deben revisar una caridad antes de donar, y no deben sentirse presionados para donar inmediatamente.

Los contribuyentes que donan dinero o bienes a una organización benéfica pueden reclamar una deducción en su declaración de impuestos federal al reducir la cantidad de sus ingresos tributables. Pero los contribuyentes deben recordar que, para recibir una deducción, deben donar a una organización benéfica calificada. Para verificar el estado de una organización benéfica, use la Búsqueda de Organización Exenta de Impuestos (en inglés). (También es importante que los contribuyentes recuerden que no pueden deducir regalos a individuos o a organizaciones y candidatos políticos.)

Estos son algunos consejos para recordar acerca de estafas de organizaciones benéficas falsas:

  • Las personas nunca deben dejar que alguien que los llame por teléfono los presione. Una organización benéfica legítima aceptará con gusto su donación en cualquier momento, así que no hay prisa. Se alienta a los donantes a tomar tiempo para investigar.
  • Los donantes potenciales deben preguntarle al recaudador de fondos el nombre exacto de la organización, la dirección web y la dirección postal, para poder confirmarlo más tarde. Algunos vendedores telefónicos deshonestos usan nombres que suenan parecidos a los de importantes organizaciones benéficas conocidas para confundir a las personas.
  • Tenga cuidado de cómo se paga una donación. Los donantes no deben trabajar con organizaciones benéficas que les piden que paguen a través de números de una tarjeta de regalo o de una transferencia de dinero. Así es cómo los estafadores piden que las personas paguen. Es más seguro pagar con tarjeta de crédito o cheque - y sólo después de haber investigado la organización.

Para obtener más información acerca de las organizaciones benéficas falsas, vea la información acerca de las estafas de organizaciones benéficas falsas en el sitio web de la Comisión Federal de Comercio.

Fraude dirigido a inmigrantes y a personas de la tercera edad

Los que se hacen pasar por el IRS y otros estafadores también se dirigen a grupos con dominio limitado del inglés, así como a ciudadanos de la tercera edad. Estas estafas a menudo son de naturaleza amenazantes.

Aunque ha disminuido recientemente, la estafa de suplantación del IRS sigue siendo una estafa común. En esta estafa un contribuyente recibe una llamada telefónica que lo amenaza con tiempo en la cárcel, la deportación o la revocación de una licencia de conducir de parte de alguien que dice estar con el IRS. Los contribuyentes que son inmigrantes recientes a menudo son los más vulnerables y deben ignorar estas amenazas y no involucrarse con los estafadores.

El IRS les recuerda a los contribuyentes que el primer contacto con el IRS generalmente será por correo, no por teléfono. Los empleados legítimos del IRS no amenazarán con revocar licencias ni deportar a una persona. Estas son tácticas para asustar.

Como las estafas telefónicas representan una gran amenaza para las personas con acceso limitado a la información, incluidas las personas que no se sienten completamente cómodos con el idioma inglés, el IRS añadió nuevas características para ayudar a aquellos que están más cómodos en un idioma distinto al inglés. El Anexo LEP PDF permite a un contribuyente seleccionar en qué idioma desea comunicarse. Una vez que completen y presenten el anexo, recibirán comunicaciones futuras en el idioma preferido seleccionado.

Además, el IRS provee información tributaria, formularios y publicaciones en muchos idiomas además del inglés. La Publicación 17 del IRS, El impuesto federal sobre los ingresos, ahora está disponible en español, chino (simplificado y tradicional), vietnamita, coreano y ruso.

Personas de la tercera edad tengan cuidado

Las personas de la tercera edad y quienes se preocupan por ellos necesitan estar en alerta a las estafas tributarias dirigidas a los estadounidenses de la tercera edad. El IRS reconoce la gran cantidad de fraude dirigido a esta población, junto con el Departamento de Justicia y el FBI, la Comisión Federal de Comercio y la Oficina de Protección Financiera del Consumidor (CFPB), entre otros.

En un esfuerzo por facilitar la presentación de impuestos para las personas de la tercera edad, el IRS les recuerda a las personas nacidas antes del 2 de enero de 1956 que rediseñó el Formulario 1040 y sus instrucciones, y que pueden usar el Formulario 1040-SR (SP) y las instrucciones relacionadas.

El IRS les recuerda a las personas de la tercera edad que la mejor fuente de información acerca de sus impuestos federales es IRS.gov.

Esquemas de ofrecimientos de transacción

Los esquemas de ofrecimientos de transacción (OIC, por sus siglas en inglés) convierten el programa del IRS en algo que no es: engañando a las personas sin posibilidad de cumplir con los requisitos mientras cobran tarifas excesivas, a menudo miles de dólares.

"Nos preocupa cada vez más que las personas que tienen problemas para pagar sus impuestos sean engañadas con afirmaciones engañosas sobre el pago de sus deudas tributarias por 'centavos de dólar'", dijo Chuck Rettig, Comisionado del IRS. "El IRS insta a las personas a que se tomen unos minutos para revisar la información en IRS.gov para ver si podrían ser un buen candidato para el programa y evitar promotores costosos que se anuncian en la radio y la televisión."

El IRS les recuerda a los contribuyentes que tengan cuidado con los promotores que afirman que sus servicios son necesarios para liquidar con el IRS, que sus deudas tributarias se pueden liquidar por "centavos por dólar" o que existe un período de tiempo limitado para resolver las deudas tributarias a través del OIC.

Un "ofrecimiento" u OIC, es un acuerdo entre el contribuyente y el IRS que resuelve la deuda tributaria del contribuyente. El IRS tiene la autoridad para liquidar o "saldar" las obligaciones tributarias federales aceptando un pago inferior al total en determinadas circunstancias. Sin embargo, algunos promotores aconsejan inapropiadamente a los contribuyentes endeudados que presenten una solicitud de OIC ante el IRS, a pesar de que los promotores saben que la persona no califica. Esto les cuesta tiempo y dinero a los contribuyentes honestos.

Los contribuyentes deben ser especialmente cautelosos con los promotores que afirman que pueden obtener acuerdos de ofrecimientos más grandes que otros o que hacen promesas engañosas de que el IRS aceptará un ofrecimiento por un pequeño porcentaje. Las empresas que se anuncian en la televisión o la radio con frecuencia no pueden hacer nada por los contribuyentes que éstos no puedan hacer por sí mismos al comunicarse directamente con el IRS.

Los contribuyentes pueden ir a IRS.gov y revisar la herramienta Verificación preliminar para el ofrecimiento de transacción (en inglés) para ver si califican para un OIC. El IRS les recuerda a los contribuyentes que bajo la política de reducción de multa incurrida por primera vez (en inglés), los contribuyentes pueden acudir directamente al IRS para obtener un alivio administrativo de una multa que de otro modo se agregaría a su deuda tributaria.

Preparadores de impuestos inescrupulosos

Aunque la mayoría de los preparadores de impuestos son éticos y confiables, los contribuyentes deben tener cuidado con los preparadores que no firman las declaraciones de impuestos que preparan, a menudo conocidos como preparadores fantasmas. Para las declaraciones presentadas electrónicamente, el preparador fantasma las preparará, pero no firmará digitalmente como preparador pagado.

Por ley, cualquier persona a quien se le pague por preparar o ayudar en la preparación de declaraciones de impuestos federales debe tener un Número de identificación tributario del preparador (PTIN, por sus siglas en inglés) válido. Los preparadores pagados deben firmar e incluir su PTIN en la declaración. No firmar una declaración es una señal de alerta de que el preparador pagado puede buscar obtener una ganancia rápida al prometer un gran reembolso o cobrar tarifas a base del monto del reembolso.

Los preparadores de declaraciones de impuestos sin escrúpulos también pueden:

  • Exigir el pago en efectivo únicamente y no proporcionará un recibo.
  • Inflar ingresos para que sus clientes califiquen para créditos tributarios.
  • Reclamar deducciones falsas para aumentar el monto del reembolso.
  • Dirigir los reembolsos a su cuenta bancaria, no a la cuenta del contribuyente.

Es muy importante que los contribuyentes elijan sabiamente al preparador de impuestos. La página Elegir un profesional de impuestos en IRS.gov tiene información acerca de las credenciales y calificaciones (en inglés) de preparadores de impuestos. El Directorio del IRS de preparadores de declaraciones de impuestos federales con credenciales y calificaciones selectas (en inglés) puede ayudar a identificar a muchos preparadores de acuerdo con la credencial o calificación.

Los contribuyentes también deben recordar que son legalmente responsables por la información incluida en su declaración de impuestos, aunque sea preparada por otra persona. Los consumidores pueden ayudar a protegerse al elegir a un preparador de impuestos de buena reputación.

Fraude de seguro por desempleo

El fraude de seguro por desempleo a menudo incluye a personas que actúan en coordinación con o contra empleadores e instituciones financieras para obtener asistencia estatal y local a la que no tienen derecho. Estas estafas pueden provocar problemas que pueden afectar negativamente a los contribuyentes a largo plazo.

Los estados, los empleadores y las instituciones financieras deben estar conscientes de las siguientes estafas relacionadas con el seguro por desempleo:

  • Fraude relacionado con la identidad: Los declarantes presentan solicitudes de pagos por desempleo con información de identificación robada o falsa para apropiarse de una cuenta.
  • Fraude entre empleador y empleado: El empleado recibe pagos por desempleo mientras que el empleador continúa pagando al empleado salarios reducidos y no declarados.
  • Implementar fraude de ingresos: Una persona regresa al trabajo y no informa los ingresos para seguir recibiendo pagos de beneficios por desempleo, o en un esfuerzo por recibir pagos por desempleo más altos, los solicitantes reclaman salarios más altos de lo que realmente ganaron.
  • Fraude de empleador y empleado ficticio: Los solicitantes afirman falsamente que trabajan para una empresa legítima, o crean una empresa ficticia, y proveen registros ficticios de empleados y salarios para solicitar pagos de beneficios por desempleo.
  • Fraude de información confidencial: Los empleados del estado usan credenciales confidenciales para acceder o cambiar las reclamaciones por desempleo, lo que resulta en aprobar solicitudes que no son calificadas, montos de pagos que no son calificados, o movimiento de fondos por desempleo a cuentas que no están en la solicitud.

A continuación, hay una breve lista de indicadores financieros de fraude por desempleo:

  • Los pagos por desempleo vienen de un estado distinto del que el cliente reside o ha trabajado anteriormente.
  • Múltiples pagos estatales de desempleo se realizan dentro del mismo plazo de desembolso.
  • Los pagos por desempleo se efectúan a nombre de una persona distinta del titular de la cuenta o a nombre de múltiples beneficiarios de pagos por desempleo.
  • Se realizan numerosos depósitos o transferencias electrónicas de fondos (EFTs) que indican que son pagos de desempleo de uno o más estados a personas distintas del titular(es) de la cuenta.
  • Se observa una mayor cantidad de pagos por desempleo en el mismo período de tiempo en comparación con clientes similares y la cantidad que recibieron.

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IR-2021-142: IRS extends tax relief for employer leave-based donation programs that aid victims of the COVID-19 pandemic

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Issue Number:    IR-2021-142

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IRS extends tax relief for employer leave-based donation programs that aid victims of the COVID-19 pandemic

WASHINGTON – The Internal Revenue Service today extended the tax relief provided in Notice 2020-46 for calendar year 2021 for employers whose employees forgo sick, vacation or personal leave because of the COVID-19 pandemic.

Notice 2021-42 provides that cash payments employers make to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave which their employees forgo will not be treated as compensation. Similarly, the employees will not be treated as receiving the value of the leave as income and cannot claim a deduction for the leave that they donated to their employer.

Employers, however, may deduct these cash payments as a business expense or as a charitable contribution deduction if the employer otherwise meets the respective requirements of either section.

Notice 2020-46 and Notice 2021-42 provide further details for employers with leave-based donation programs

Additional information about tax relief for those affected by the COVID-19 pandemic can be found on IRS.gov.

 

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IR-202-141: IRS ‘Dirty Dozen’ list warns people to watch out for tax-related scams involving fake charities, ghost preparers and other schemes

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Issue Number:    IR-2021-141

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IRS 'Dirty Dozen' list warns people to watch out for tax-related scams involving fake charities, ghost preparers and other schemes

Agency reminds seniors and immigrants to watch out for predators

WASHINGTON – The Internal Revenue Service today continued its "Dirty Dozen" tax scams with a warning for people to watch out for predators using tax-related schemes ranging from fake charities to scams targeting seniors and immigrants.

The IRS continues to see a group of ruses by dishonest people who trick others into doing something illegal or which ultimately causes them harm. Predators encourage otherwise honest people to do things they don't realize are illegal or prey on their good will to take something from them.

Several schemes involve fraudsters targeting groups like seniors or immigrants, posing as fake charities impersonating IRS authorities, charging excessive fees for Offers in Compromise, conducting unemployment insurance fraud and unscrupulously preparing tax returns.

Here are five of this year's "Dirty Dozen" scams.

Fake charities

The IRS advises taxpayers to be on the lookout for scammers who set up fake organizations to take advantage of the public's generosity. They especially take advantage of tragedies and disasters, such as the COVID-19 pandemic.

Scams requesting donations for disaster relief efforts are especially common on the phone. Taxpayers should always check out a charity before they donate, and they should not feel pressured to give immediately.

Taxpayers who give money or goods to a charity may be able to claim a deduction on their federal tax return by reducing the amount of their taxable income. But taxpayers should remember that to receive a deduction, taxpayers must donate to a qualified charity. To check the status of a charity, use the IRS Select Check tool. (It's also important for taxpayers to remember that they can't deduct gifts to individuals or to political organizations and candidates.)

Here are some tips to remember about fake charity scams:

  • Individuals should never let any caller pressure them. A legitimate charity will be happy to get a donation at any time, so there's no rush. Donors are encouraged to take time to do the research.
  • Potential donors should ask the fundraiser for the charity's exact name, web address and mailing address, so it can be confirmed later. Some dishonest telemarketers use names that sound like large well-known charities to confuse people.
  • Be careful how a donation is paid. Donors should not work with charities that ask them to pay by giving numbers from a gift card or by wiring money. That's how scammers ask people to pay. It's safest to pay by credit card or check — and only after having done some research on the charity.

For more information about fake charities see the information on fake charity scams on the Federal Trade Commission web site.

Immigrant/senior fraud

IRS impersonators and other scammers are known to target groups with limited English proficiency as well as senior citizens. These scams are often threatening in nature.

While it has diminished some recently, the IRS impersonation scam remains a common scam. This is where a taxpayer receives a telephone call threatening jail time, deportation or revocation of a driver's license from someone claiming to be with the IRS. Taxpayers who are recent immigrants often are the most vulnerable and should ignore these threats and not engage the scammers.

The IRS reminds taxpayers that the first contact with the IRS will usually be through mail, not over the phone. Legitimate IRS employees will not threaten to revoke licenses or have a person deported. These are scare tactics.

As phone scams pose a major threat to people with limited access to information, including individuals not entirely comfortable with the English language, the IRS has added new features to help those who are more comfortable in a language other than English. The Schedule LEP allows a taxpayer to select in which language they wish to communicate. Once they complete and submit the schedule, they will receive future communications in that selected language preference.

Additionally, the IRS is providing tax information, forms and publications in many languages other than English. IRS Publication 17, Your Federal Income Tax, is now available in Spanish, Chinese (simplified and traditional), Vietnamese, Korean and Russian.

Seniors beware

Senior citizens and those who care about them need to be on alert for tax scams targeting older Americans. The IRS recognizes the pervasiveness of fraud targeting older Americans, along with the Department of Justice and FBI, the Federal Trade Commission and the Consumer Financial Protection Bureau (CFPB), among others.

In an effort to make filing taxes easier for seniors, the IRS reminds seniors born before Jan. 2, 1956 that the IRS has re-designed the Form 1040 and its instructions, and that they can use the Form 1040SR and related instructions.

The IRS reminds seniors that the best source for information about their federal taxes is IRS.gov.

Offer in Compromise 'mills'

Offer in Compromise mills contort the IRS program into something it's not – misleading people with no chance of meeting the requirements while charging excessive fees, often thousands of dollars.

"We're increasingly concerned that people having trouble paying their taxes are being duped into misleading claims about settling their tax debts for 'pennies on the dollar'," said IRS Commissioner Chuck Rettig. "The IRS urges people to take a few minutes to review information on IRS.gov to see if they might be a good candidate for the program – and avoiding costly promoters who advertise on radio and television."

The IRS reminds taxpayers to beware of promoters claiming their services are needed to settle with the IRS, that their tax debts can be settled for "pennies on the dollar" or that there is a limited window of time to resolve tax debts through the Offer in Compromise (OIC) program.

An "offer," or OIC, is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. However, some promoters are inappropriately advising indebted taxpayers to file an OIC application with the IRS, even though the promoters know the person won't qualify. This costs honest taxpayers money and time.

Taxpayers should be especially wary of promoters who claim they can obtain larger offer settlements than others or who make misleading promises that the IRS will accept an offer for a small percentage. Companies advertising on TV or radio frequently can't do anything for taxpayers that they can't do for themselves by contacting the IRS directly.

Taxpayers can go to IRS.gov and review the Offer in Compromise Pre-Qualifier Tool to see if they qualify for an OIC. The IRS reminds taxpayers that under the First Time Penalty Abatement policy, taxpayers can go directly to the IRS for administrative relief from a penalty that would otherwise be added to their tax debt.

Unscrupulous tax return preparers

Although most tax preparers are ethical and trustworthy, taxpayers should be wary of preparers who won't sign the tax returns they prepare, often referred to as ghost preparers. For e-filed returns, the "ghost" will prepare the return, but refuse to digitally sign as the paid preparer.

By law, anyone who is paid to prepare, or assists in preparing federal tax returns, must have a valid Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund.

Unscrupulous tax return preparers may also:

  • 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.
  • Direct refunds into their bank account, not the taxpayer's account.

It's important for taxpayers to choose their tax return preparer wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.

Taxpayers should also remember that they are legally responsible for what is on their tax return even if it is prepared by someone else. Consumers can help protect themselves by choosing a reputable tax preparer.

Unemployment insurance fraud

Unemployment fraud often involves individuals acting in coordination with or against employers and financial institutions to get state and local assistance to which they are not entitled. These scams can pose problems that can adversely affect taxpayers in the long run.

States, employers and financial institutions need to be aware of the following scams related to unemployment insurance:

  • Identity-related fraud: Filers submit applications for unemployment payments using stolen or fake identification information to perpetrate an account takeover.
  • Employer-employee collusion fraud: The employee receives unemployment insurance payments while the employer continues to pay the employee reduced, unreported wages.
  • Misrepresentation of income fraud: An individual returns to work and fails to report the income to continue receiving unemployment insurance payments, or in an effort to receive higher unemployment payments, applicants claim higher wages than they actually earned.
  • Fictitious employer-employee fraud: Filers falsely claim they work for a legitimate company, or create a fictitious company, and supply fictitious employee and wage records to apply for unemployment insurance payments.
  • Insider fraud: State employees use credentials to inappropriately access or change unemployment claims, resulting in the approval of unqualified applications, improper payment amounts, or movement of unemployment funds to accounts that are not on the application.

Below is a short list of financial red flag indicators of unemployment fraud:

  • Unemployment payments are coming from a state other than the state in which the customer reportedly resides or has previously worked.
  • Multiple state unemployment payments are made within the same disbursement timeframe.
  • Unemployment payments are made in the name of a person other than the account holder or in the names of multiple unemployment payment recipients.
  • Numerous deposits or electronic funds transfers (EFTs) are made that indicate they are unemployment payments from one or more states to people other than the account holder(s).
  • A higher amount of unemployment payments is seen in the same timeframe compared to similar customers and the amount they received.

 

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