IRS says stimulus checks are on the way
Who is at risk for the scams?
The $1,200 payments are available to those earning less than $75,000 as an individual, including recipients of Social Security, disability and veterans benefits. Those earning above that threshold and up to $99,000 get a smaller payment.
People in that population, including the elderly, those with less education and those who aren't tech savvy are the most likely to fall victim to some of these scams, and are also the most likely to need the money, said Vanita Pandey, the head of strategy at Arkose Labs, a company that detects and prevents online fraud.
Coronavirus means that a lot of people who weren't familiar with the internet are now using apps to communicate with family and friends or ordering groceries online, giving scammers ample opportunity to find easy targets, Pandey said.
IRS Criminal Investigation is actively working to combat scam artists trying to exploit Economic Impact Payments," the agency said in a statement Tuesday. "So far, the scams CI has already seen look to prey on vulnerable taxpayers who are unaware of how the payments will reach them. IRS CI is prioritizing these types of investigations to help protect taxpayers and the tax system."
There are some common-sense moves that check recipients can take to protect their personal data as well as their payments.
Don’t click links
Avoid clicking on links sent in email or text messages that appear to be from the IRS. The IRS said it won't contact people by telephone, email, social media or text message to ask for personal information.
The IRS is using tax return information from 2018 and 2019 to send the payments. For those who have direct deposit information on file from a tax refund in one of those years, the IRS will send the money directly to their bank accounts.
Verify bank information
People who didn't file a tax return in either year should submit their bank account or address information to the IRS as soon as possible to prevent a criminal from submitting incorrect information to divert payments. Social Security beneficiaries will automatically receive their payments, though those who just started receiving benefits will need to send their information to the IRS.
The IRS is still figuring out how to get the funds to Supplemental Security Income disability recipients. People who get Social Security or disability payments who have dependent children will likely need to upload their information to the IRS to get the additional $500 per child.
Use IRS reporting portal to check for payment
The agency is setting up an online portal that will let people update their direct deposit or mailing address and, eventually, let recipients see the status of their payment and the day it is scheduled to be mailed or deposited. The IRS will also mail notifications to recipients about two weeks after their payment has been sent that will also include instructions about how to report that a payment hasn't arrived.
Get an email from USPS
The U.S. Postal Service also offers a heads-up to people about what's coming in the mail that day. Users can sign up online to get an "Informed Delivery" email about what is coming in the mail later that day. That can let mailed check recipients to know to be diligent in checking the mail so payments aren't stolen.
Fraud will be hard to quantify
It's hard to know yet just how much fraud risk there is with the stimulus payments. After Hurricane Katrina, about 10% of government payments were hit with fraud, Kim Sutherland, a vice president at LexisNexis Risk Solutions, said.
Identity theft has plagued the IRS in recent years, so much so the Treasury Inspector General for Tax Administration called it an "epidemic" in congressional testimony. Scammers have been able to steal taxpayer information and file fraudulent tax returns to illicitly get refunds. The agency has greatly reduced the prevalence of stolen tax refunds by upgrading detection systems.
"The potential for fraud is present, but it is not substantially different from what IRS needs to deal with every tax filing season," said Jack Smalligan, a former Office of Management and Budget official who is now a senior policy fellow at the Urban Institute. "The IRS has an elaborate process to identify scams, particularly high-volume scammers."
Still, thieves are able to adapt their schemes, said Marcus Christian, a former top attorney in the U.S. attorney's office for the Southern District of Florida. Government agencies are much more adept at detecting and preventing fraud, but the stimulus checks present an unprecedented opening for scams, he said.
"Fraud isn't going to be reduced to zero," said Christian, who is now a partner at law firm Mayer Brown. "There is some balancing of interests here: Get these out quickly to taxpayers, which will result in some fraud, and some taxpayers may have to go through an onerous burden to get rightful payment."