Fake Charities Are on the 2016 IRS Dirty Dozen List of Tax Scams

The IRS has warned taxpayers about groups that masquerade as charitable organizations to solicit donations from unsuspecting contributors, one of the “Dirty Dozen” for the 2016 filing season.

"Fake charities are created by scam artists to steal your money or your identity and they are a recurring problem," said IRS Commissioner John Koskinen. "Taxpayers should make sure to research organizations before donating money."

This list, which is compiled annually, the “Dirty Dozen” lists many of the common scams that taxpayers may encounter. However, the number of scams often increases during tax filing season as people start to prepare their tax returns or hire someone to do it on their behalf.

The scammers can face significant penalties and interest and potentially criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to stop scams and go after the criminals behind the scams.

The IRS offers three suggestions to taxpayers who make charitable donations:

  • Watch out for charities that have names that sound familiar or are similar to nationally known organizations. Some fake charities use names or websites that sound similar to the actual respected and legitimate organization. IRS.gov maintains a database, known as the Exempt Organizations Select Check, which offers a way for people to find information on legitimate, qualify charities to which donations will be tax-deductible. Legitimate charities will offer an Employer Identification Number (EIN), upon request which can be used to verify the legitimacy of the charity via Exempt Organizations Select Check. It is a good idea to check a charity's EIN.
  • Don't offer personal financial and identification information, such as a Social Security number or passwords, to any person who requests a donation from you. Scam artists can use this information to steal your identity and your money. People use credit card numbers to make legitimate contributions. However, you should be extremely careful if someone has called you and you have not yet been able to confirm that the person is calling from a legitimate charity.
  • Don't offer or send cash. For security and tax record purposes, you should make sure that you contribute donations via check, credit card or another way that provides documentation of the gift.

Impersonation of Charitable Organizations 

Another recurring fraud or abuse problem involves scams that occur after a major natural disaster.

Following a major disaster, it is common for a scam artist to impersonate a charity in order to get money or private information from well-intentioned taxpayers. Scam artists can use many tactics. Some scammers try to set up bogus charities by calling people via phone or contacting them via email to request financial information or charitable donations. They may even request information directly from disaster victims by claiming to be working or calling on behalf of the IRS to assist victims with filing casualty loss claims and getting tax refunds.

They may attempt to steal victims identities or financial resources by gaining access to personal financial information. Fake websites may be set up to solicit donations for natural disaster victims.

To help disaster victims, the IRS encourages taxpayers to donate to charities that are recognized by the IRS. If you are a disaster victim, you may call the IRS toll-free disaster assistance telephone number (1-866-562-5227) if you have questions about tax relief or disaster related tax issues.

Don't forget to search for legitimate and qualified charities with the Select Check search tool on IRS.gov. (EINs are often called federal tax identification numbers, which is the same number as an EIN when using Select Check.)

Questions about your charitable contributions? Let us help with your tax planning. Call today at (813) 600-3199 to discuss your situation.