In March 2023, the IRS released an alert as part of their Dirty Dozen campaign warning taxpayers of fake charity scams. These scams often appear after major disasters but may arise at any time throughout the year.
Fraudsters may create fake charities after an emergency or natural disaster, like an earthquake or wildfire, to take advantage of taxpayers’ kindness and generosity. They aim to steal money as well as users’ sensitive data. The IRS is warning the public against sharing personal information over the phone, email, and social media, since these fraudsters specialize in identity theft and the stealing of funds and data. Taxpayers who donate to charity may be eligible for a deduction on their federal tax return, but this only pertains to IRS-qualified tax-exempt organizations.
Indicators of Fake Charity Fraud
- Pressure: scammers may concentrate on an urgent need to pressure their target into making an immediate payment.
- Close But Not Quite: Scammers may use names that resemble well-known charities. Potential donors should verify the charity’s exact name, website, and mailing address before making a donation.
- Method of accepting donations: Scammers may ask for payment by giving numbers from a gift card or by wiring money. In this situation, the charity is fake, since you would usually pay by credit card or check.
- Personal information: Scammers may ask for a target’s Social Security number, credit card numbers or PIN numbers, which you should not provide. Only give any bank or credit card numbers after you’ve confirmed the charity is real.
Blowing the Whistle on Fake Charities
- As part of the Dirty Dozen campaign, the IRS encourages individuals to report any abusive tax schemes, including fake charity scams.
- Taxpayers and tax practitioners may report violations to the IRS Whistleblower Office and may be eligible to earn significant monetary awards.
- Individuals are encouraged to mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers to IRS Lead Development Center in the Office of Promoter Investigations.
Whistleblowers seeking legal advice may contact Kohn, Kohn & Colapinto for a consultation.
