Scammers continually invent ways to steal money and personal information from U.S. taxpayers. For example, in recent years the Treasury Inspector General for Tax Administration (TIGTA) has been busy investigating a widespread impersonation scam whereby impostors claim that they are IRS employees in order to extort payments from taxpayers. TIGTA estimated that, as of September 2017, the scam had generated nearly $61 million in losses from over 12,000 victims–over $500 per person.
While various scams seem to be a perpetual feature of contemporary life, their prevalence tends to increase during tax season because of the huge amount of money and personal information being transferred between individuals, accountants, websites, and the IRS during that period. So, while taking care of taxes can be onerous in its own right, remain vigilant with your information and take as little for granted as possible in that regard. To help you protect your financial and personal information, this blog describes five common tax scams and how they can trap the unwary:
- Phishing Emails
Phishing is a scam in which criminals try to steal personal information by sending emails that appear to come from an IRS address and generally do one of two things:
- Ask you to “confirm” personal information or click on a link that will install malware or spyware on your computer
- Direct you to a fraudulent website that requests you to take the same actions
According to the IRS, a more recent development is a W-2 email phishing scam that has conned large corporations into providing copies of their employees’ W-2 forms. Known as the “CEO impostor scam,” the email appears to come from a company’s CEO or President and requests W-2 data from human resources or payroll. The scammers then sell the info to other criminals or use it to file fraudulent tax returns.
Remember: the IRS will never contact you by email to request confidential information or discuss balances or refunds, so do not act on these messages no matter how legitimate they may appear. Instead, forward them to the IRS at [email protected]. See https://www.treasury.gov/services/report-fwa/Pages/Report-Email-Scams.aspx for more details.
- Phone Scams
With phone scams, criminals posing as IRS agents call taxpayers and tell them that they have a tax bill that must be paid immediately if they want to avoid arrest, deportation, license revocation, and other dire outcomes. These scammers spoof their number to make it appear as if they are actually calling from the IRS, which fools a lot of people into paying the amount demanded, usually via wire transfer or prepaid debit card.
If you get a call like this, hang up. The IRS never contacts people by phone demanding money in such a manner. They communicate with taxpayers exclusively via snail mail.
- Fraudulent Return Preparers
While the overwhelming majority of tax preparers are honest and provide a reliable service, there are some dishonest individuals who go into business each filing season with intent to commit identity theft, refund fraud, and other scams that harm taxpayers. Before handing over your documentation to an advertised tax preparer, look into their background and be especially wary of those in temporary setups that could (and probably will) disappear soon.
- Fake Charities
Many of us reduce our tax bill by donating to recognized charities. In this scam, groups pretending to be charitable organizations will approach taxpayers via phone or email to request donations. Some of them will even use names similar to well-known organizations in order to gain trust. Before donating to a charity you are unfamiliar with, confirm that it is legitimate by using this tool that the IRS provides on its website.
- Inflated Refund Promises
There is a certain type of tax scammer who promises large refunds. They tend to prey on people who do not have a filing requirement, such as the elderly and low-income individuals, or people who speak little to no English. Even if you do have to file and anticipate a refund, scammers will insist that they can get you a bigger one via tax breaks you would not ordinarily take, such as the American Opportunity Tax Credit or the Earned Income Tax Credit.
To avoid this scam, watch out for anyone who:
- Asks you to sign a blank return
- Promises you a refund without even looking at your records
- Tells you that the refund should be deposited into their account first so they can deduct their fee before paying you
If you believe you are a victim of tax fraud or identity theft, report it immediately to TIGTA. Anyone who receives a fraudulent tax refund should contact the IRS for instructions on returning the money. Taxpayers in Missouri can also contact consumer rights attorney Bryce Bell at Bell Law today. Attorney Bell will advise you on how to deal with the legal aspects of your current situation and help you take steps to protect yourself in the future. Call us at (816) 886-8206.