Every year, the IRS and its Security Summit partners release security tips to avoid tax scams. During Giving Tuesday, they alerted taxpayers of recent charity scams. Optima Tax Relief explains these scams and how to avoid them all year long.
During the holidays, scammers use fake charities to commit fraud by requesting donations that do not benefit an actual cause. These scams not only steal money from taxpayers but also attempt to steal personal and financial information from taxpayers that can potentially result in identity theft. Once the taxpayer’s identity is stolen, scammers can then file fake tax returns to obtain the taxpayer’s refund.
The holiday season sees an increase in these types of scams as thieves seek to take advantage of the generosity that accompanies a time of giving. This is also true after natural disasters and the donations are usually requested over the phone, through emails, text messages, websites and social media messages. Although the messages and charities may look legitimate, taxpayers should take extra precautions by researching these organizations’ credibility. Scammers can alter or spoof their calling ID or email address to appear legitimate, so even those that appear real may not be safe to give to.
Taxpayers should follow a few simple tips to avoid being scammed during the holidays, disaster or at any time during the year. Scammers may attempt to pressure the taxpayer into donating by expressing an urgent need for funds. However, a legitimate charity will typically be grateful for any donation at any time. If a taxpayer feels threatened or pressured by the caller seeking a donation, it’s best to avoid giving any money or information to them. Additionally, if a charity is seeking donations via gift cards or through wire transfers, it is likely a scam. Once a taxpayer confirms a charity’s legitimacy, they should donate via credit card or check. Finally, taxpayers should protect all personal and financial information. Legitimate charities will never ask for PIN numbers, credit card numbers or Social Security numbers and donors should not give this information out.
Any taxpayers who donate and plan to claim a deduction for charitable contributions should first confirm the organization qualifies to receive contributions. Once confirmed, they should refer to IRS Publication 526 to find the types of contributions they can deduct, how much they can deduct, as well as what records to keep and how to report contributions.