Beware The Newest Type Of Fraud On The Block: Child Tax Credit Scams

By a Biometrica staffer

On Wednesday, July 21, the Internal Revenue Service (IRS) issued a warning urging parents to be aware and on the alert for criminals trying to steal their personal and financial information, as families across the country are starting to receive the first of the new monthly child tax credit payments. Last week, tens of millions of families were sent the first payment of the expanded child tax credit, part of the $1.9 trillion stimulus package signed by President Joe Biden earlier this year.

Before we discuss the IRS warning and the best steps to follow to avoid falling prey to tax scammers, here’s a quick look at why this could be construed as another opportunity for criminals to exploit. Firstly, the Covid-19 relief package — as it is also called — increased the size of the credit, made it fully refundable so more households qualified, and called for it to be sent out in periodic payments rather than be rolled into regular tax-time refunds, a major shift in policy aimed at helping families pay their bills.

Politically, among some Democrats, there’s already calls to make the more generous credit permanent. As we mentioned earlier, under this new policy, payments have already been sent to tens of millions of families. There are various articles in mainstream media about who qualifies for this, etc., although the main idea behind the policy is to help low-income families and poor children. Whether the higher credit becomes permanent or not, what’s given is that there is going to be transfer of money to tens of millions of families. To scammers, that’s opportunity enough to try and defraud some of those people of their much-needed and earned money.

How could they do that? They could adopt various methods, as the IRS warning says. It says criminals could ask you by phone, email, text, or even on social media, to verify your information so you can get advance Child Tax Credit payments. Cybercriminals, in particular, have been additionally active since the pandemic began, and are on the lookout for every opportunity to scam people. They may use these payments as bait, the IRS warns.

Here are a few things to remember, specifically when it comes to child tax credit scams and to avoid falling prey to them:

• Never give out any personal information, your social security number, etc. to anyone who calls/emails/texts/direct messages (via social media) you asking for it.
• The IRS does not initiate contact with taxpayers by email, text messages, or social media channels to request personal or financial information. No government agency will call you and ask you to confirm sensitive information over the phone, such as your social security number.
• Even when it comes to phone calls, the IRS does not leave pre-recorded, urgent, or threatening messages. If you get a voicemail saying a warrant will be issued for your arrest… it’s not the IRS calling.
• There is no need to take any additional action to get advance payments of the child tax credit. If you are eligible, the IRS will use information from your 2019 or 2020 tax return to automatically enroll you for advance payments. So do not reveal any information to someone who calls/emails/texts/direct messages (via social media) you saying you need to fill out additional information to qualify for it.
• If, however, you are not required to file a tax return and have not given the IRS your information, make sure you go to the IRS website directly to provide the basic information required for the child tax credit here. You can also find more information about the advance child tax credit payments for 2021 on the IRS website here.
• In case you haven’t received your payment even after having given your information, or having filed taxes, here’s a good article on what measures you can take.
• It’s best to avoid answering calls from unknown numbers altogether. Let it go to voicemail instead, most experts say. In particular, if you can see from the number that it’s a call that appears to be coming from a state in which you have no connections — i.e., no relationships to people or companies there — then you should definitely let those calls go to voicemail.
• Phones are the most common medium used by scammers to swindle Americans of their money. Nearly one-in-three Americans have fallen victim to a phone scam in the past year, according to a report from Truecaller published early this month.

It’s not often easy to tell whether something is a scam or not. There have been several instances where scammers have been so thorough in their research that it takes quite a bit of effort to figure it out. However, in the case of the child tax credit, given that it’s also still a “new opportunity” that scammers wouldn’t have had too much time to research either, following the IRS’ measures and general guidelines on avoiding various scams is a good defense mechanism to begin with.

For more resources from the IRS on scams and frauds, click here.