Number five on the Dirty Dozen list for 2023 is warnings of scammers creating fake charities to exploit taxpayers. The IRS is urging taxpayers to be on alert for scammers using fake charities to trick honest taxpayers, especially following major disasters.
Following earthquakes, wildfires or other natural disasters, good-natured taxpayers are known to donate their tax refunds to help victims after an emergency. Scammers often prey on well-intentioned donors by posing as fake charities in hopes to steal not only their tax return money, but also personal and financial data related to tax identity theft.
“Scammers move quickly and use these events to try taking advantage of the public's generosity, stealing not just money, but personal information that can lead to identity theft. Scams requesting donations are especially common over the phone, as well as by email and texts. Taxpayers should never feel pressured to give immediately, and they should look to recognized, established charities to help victims” said IRS Commissioner Danny Werfel.
To protect yourself and loved ones from fake charity scams follow these tips:
- Don’t give in to pressure. Legitimate charities are happy to get a donation at any time; so, people should feel no rush.
- Verify first. Potential donors should ask the fundraiser for the charity's exact name, website and mailing address so they can independently confirm it.
- Be cautious about how a donation is requested. Taxpayers should never work with charities that ask for donations by giving numbers from a gift card or by wiring money.
- Don’t give more information than needed. Taxpayers should never give out Social Security numbers, credit card numbers or PIN numbers, and they should give bank or credit card numbers only after they've confirmed the charity is real.
Taxpayers may be able to claim a deduction on their federal tax return if they itemize their deductions and give money or goods to a charity. But, charitable donations only count if they go to a qualified tax-exempt organization recognized by the IRS and not any fake or bogus charities. Scammers set up these organizations to take advantage of taxpayer’s generosity following natural disasters. They seek money and personal information, which can later be used to further exploit victims through identity theft. These scammers are often known to target seniors and groups with limitations to understanding English.
If you or someone you know falls victim to a shady tax professional, please visit our Tax Fraud Prevention webpage for more information on how to report tax scams, identity theft and tax fraud.