NEW MEXICO (KRQE) – With record unemployment and government assistance in 2020, the Internal Revenue Service is on high alert for fraud cases. The federal government also wants people to be prepared for some of the changes that could help workers this tax season.
“Last year was a crazy year and we’re seeing some of those changes on the tax returns for this year,” explained Brian Watson, Special Agent with the IRS Criminal Investigation Division covering Arizona and New Mexico. “And these things are changing on a daily basis it seems like.”
As taxpayers officially put the year 2020 behind them, there are things the IRS wants people to know about. “Criminals are always gonna try to take advantage of any pandemic, natural disaster, anything like that, and we’re definitely seeing it for right now,” Watson said.
If someone is still waiting on a COVID-19 economic impact payment, they may receive a text message or email asking for bank account information. Watson says that’s a red flag.
“The key is the IRS does not send emails, we don’t send text messages,” Watson explained. “They’re gonna ask for your bank information, they’re gonna ask for your social security number, or your date of birth – do not provide that information,” he added.
Watson said IRS agents, along with the FBI, and Small Business Administration are also investigating widespread fraud cases when it comes to Paycheck Protection Program or PPP loans. Dozens of cases have already been prosecuted.
This month, a Virginia man was sentenced to 51 months in prison for fraudulently obtaining nearly $200,000 in government loans intended to help businesses in the pandemic.
“They’re creating fake employees, basically stealing money from the government and lying,” said Watson. “We’re seeing all kinds of fraud all over the country where people basically are trying to get free money from the government.”
Law-abiding citizens shouldn’t worry, he said. However, Agent Watson did acknowledge last year’s unemployment crisis will likely raise some challenges.
“Anytime there’s a change, you may have too much money withheld or not enough, and the IRS recognizes it,” he said. If needed, payment plans can be worked out with the IRS, Watson explained.
Since the pandemic, there are also changes this year that could help the average taxpayer, Watson said. Tax returns filed this year now include a retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable.
Educators can also deduct $250 for out-of-pocket COVID-19 protective items if they were not already reimbursed for the expense. Taxpayers can also claim $300 for donations this year, even if they don’t itemize their deductions.
Watson encourages everyone to file their taxes electronically, especially since there are so many changes being made and updated in tax-filing software due to the pandemic. “You’re gonna get your refund much faster if you file electronically,” Watson said.
Any stimulus checks people received during the pandemic are not counted as taxable income. Watson said anyone can file their taxes for free online, and the IRS is updating its FAQ page with the latest information.