Within the American Rescue Plan (ARP) Act, a federal program supplying economic relief to those impacted by the COVID-19 Pandemic, is the additional Child Tax Credit program. The Child Tax Credit is a payment received by working families that qualify for financial help to support their children. Thanks to the ARP, it is the highest child tax credit in American history, with thousands of families automatically receiving payment already. By July of this year, most saw their money rolling in by way of either direct deposit, or via a mail-in check or credit card. However, the increase in payment amount has attracted the attention of scammers all over the country, and even as far into the year as November, reports are still coming in regarding attempts to steal one’s money or identity.
In an article released by the Federal Trade Commission (FTC), scams are still occurring rampantly, targeting recipients of the Child Tax Credit by means of false calls, text messages, or emails. The most common scam as of late has been fraudulent phone calls threatening individuals with suspended social security numbers, demanding they share their number to confirm their identity and “solve” the crisis. However, the actual Social Security Administration (SSA) will never contact a customer with a phone call of a threatening or urgent nature. They will also never ask for your social security number over the phone.
Scams do not stop at tax paying individuals, however, as another common scam attacks tax professionals directly. These scams are typically done through emails, rather than phone calls like the social security scams. The emails are made to look like they are from the IRS, and often attempt to gather people’s tax return information by asking for Electronic Filing Identification Numbers (EFINs). Another common tax return scam right now is one where scammers act as a taxpayer advocate service.
Spotting these types of scams, whether they are via phone or email, can be tricky. Many scammers are experienced, and craft sophisticated attacks that may look official to the untrained eye. Logos can be stolen and used in fake emails to appear official, and caller ID can show the actual phone number of the SSA. It is important to remember that neither the IRS nor the SSA will ever contact you with a phone call, text message or email for urgent matters. It is also advised that you check with the actual agency if you are unsure of a situation, and that you never pay someone via gift card or wire transfer.
In 2021, government imposter scams skyrocketed, the top one being social security scams, like we see with the Child Tax Credit. The FTC has received 263,571 total reports, with a median loss of $1,200. In total, scam victims lost $224.5 million from government imposter scams alone.
Scam callers are not the only ones who may be after the increased Child Tax Credit, as debt collectors may attempt to take advantage of receivers as well. However, this tax credit is not counted toward someone’s overall income, and therefore cannot be taken by a debt collector. In Massachusetts alone, nearly 45% of all debt collector reports in 2020 were listed as being hostile or threatening in practice. The age demographic with the most reports was 30 to 39 year olds, with the second highest being just above them in the 40 to 49 year age range.
It is not difficult to see why scammers and debt collectors alike may be attempting to take a person’s Child Tax Credit money, as the 2021 payment amount can reach up to $300 a month for each child a family has under the age of six, and $250 for every child ages six to seventeen. This payment is an important one for many families that need help with the cost of food, clothes, housing, and other necessities for their children. Payments have also been made accessible to parents who do not have permanent addresses, a bank account, and those without social security numbers. Additionally, the Child Tax Credit does not impact your immigration status, nor does it impact the status of those you live with. It also does not affect your ability to receive additional benefits, such as the Supplemental Nutrition Assistance Program (SNAP).
For those who have not automatically received their Child Tax Credit payments, the deadline for advanced payment was November 15. However, those who did not make this date will still receive their payments when they file their 2021 tax return.
