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Stimulus Checks May Create ‘Feeding Frenzy’ for Scammers (1)

April 2, 2020, 7:24 PMUpdated: April 2, 2020, 8:38 PM

There’s another risk to consider while the new coronavirus spreads through U.S. communities: scammers looking to snatch stimulus checks from people who qualify—and may need them the most.

The IRS is already warning bad actors may target the checks using old tricks to steal tax refunds, and posing as agency employees. The checks, which could total $2,400 for couples that make $150,000 or less, are a pillar of the government’s virus response (Public Law 116-136) and any scams would be damaging to individuals and families at an already stressful time, former top agency officials said.

John Koskinen, the most recent IRS commissioner, said this time poses a unique “trifecta” of problems for the government as it seeks to rush payments out the door. The combination of an extended tax filing season, virus outbreak, and stimulus checks has made it a ripe time for fraudsters to target the most vulnerable.

Koskinen said that the most vulnerable group—seniors, veterans, and low-income individuals—are those who aren’t in regular contact with the government.

“That’s the hardest group to reach and who ironically, need the money the most,” Koskinen said.

While that population has always been preyed upon by scammers during tax-refund season, the problem is compounded during this time of economic upheaval, said former IRS Commissioner Mark Everson.

“This will be a feeding frenzy,” said Everson, who led the agency from 2003 to 2007 and is now at alliantgroup LP.

The IRS on Thursday cautioned retirees who don’t file tax returns that no action is needed to receive their check. The payments will automatically be sent to those who qualify, without any contact from the agency.

States—including New Mexico, Idaho, Alabama—have also warned of the scam risk.

IRS: Be Vigilant

The agency urged people to “take extra care” to ensure any solicitation is legitimate. The IRS warned that bad actors would use emails, text messages, phony websites, direct mail, and social media channels to request personal information or seek money that may have already been deposited into bank accounts.

The agency has previously alerted Americans to potential scams that could stem from tragedies, like after Hurricane Katrina and the Boston Marathon bombing.

The agency said that a surefire way to weed out legitimate responses from the agency is if the solicitation uses phrases like “stimulus check” or “stimulus payment.” The official term the government is using is “economic impact payment.” Any other phrase is likely phony, the IRS said.

Lawrence Gibbs, who served as IRS commissioner from 1986 to 1989, said this kind of fraud is difficult for government agencies to prevent because the sheer volume of criminals are constantly drawing up new ways to steal money.

“The fraudsters are very creative, so the threat of identity theft and refund fraud has migrated to other types of taxpayers in other forms, and it still exists,” Gibbs, now at Miller & Chevalier Chartered said. “It is a constant, ongoing battle by the IRS and the criminals.”

But the agency has been warding off these kinds of schemes for decades and is well-positioned to combat any new threats, Koskinen said.

“Like I always used to say: If you’re surprised to hear from us, you’re not hearing from us,” Koskinen said.

(Updates with additional comments starting in third paragraph.)

To contact the reporter on this story: David Hood at dhood@bloomberglaw.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com

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