How to Avoid Tax Scams & IRS Fraud
Unfortunately, the start of tax season often brings the start of tax scam season. Scammers can use aggressive phone calls and phishing emails while pretending to be IRS agents or tax preparers to extract money or commit identity theft. Consequently, it’s important for you to be able to recognize and avoid scams & IRS fraud.
Protect Yourself from Tax Scams by Being Aware of the Following:
- Suspicious phone calls - The IRS sends notices, bills and letters through mail. They do not initiate contact over the phone. If you ever receive a call out-of-the-blue requesting payment, it almost certainly is not the IRS.
- Avoiding Taxpayer Scams - Scammers will often threaten lawsuit or arrest when calling victims posing as a government agent. Know that the IRS does not demand immediate payment through coercion, they will first meet with you and allow you the opportunity to appeal.
- Phishing emails - Phishing emails can appear to look official but tend to have giveaways that they are not, in fact, real. For example, these tax scam emails typically feature poor spelling, grammar and/or formatting. They also tend to ask for a response by "clicking" a link of some kind (see next).
- Links in emails - Scam artists frequently embed links in emails which may appear to be connected to legitimate websites, but can take you to a website designed to capture your personal information or install malware on your computer. As good practice, don't click on any link within an email, but instead, visit the website directly (eg https://www.irs.gov).
- Threats - Scammers and cyber criminals often use threats. The IRS does not threaten taxpayers, if there is to be a penalty assessed, it is typically done so after discussing the discrepancy with the taxpayer.
- Type of payment - If the IRS requests payments, it will not typically specify the method with which you must pay. Further, they never request a credit or debit card payment over the phone. Therefore, any request for a credit or debit card number by someone claiming to be an agent is most likely IRS fraud.
- Phony corporate executives - Scammers have been known to impersonate a high-ranking corporate executive and request information about certain employees from a lower level employee. That employee, thinking that the request is legitimate, provides the information. The scammer then takes that information and sells it to other criminals who file fraudulent tax returns under stolen identities to collect fraudulent refunds. This happened during the 2016 tax season, when scammers used this tactic to obtain information about 434 Weight Watchers International employees.
If you ever receive an unsolicited request to provide sensitive information about you or someone else, you should always try your best to investigate the legitimacy first. If the request comes via email, make sure the email comes from a legitimate address and contact the source directly before providing any information (i.e. don't click a link in an email, but navigate to their website directly). If the request came via phone, check the number, ask questions, tell the caller that you will return the call and then when they provide a number try searching for information on it online.
Don't become a victim of a tax scam this season. If you receive a phone call from the so-called IRS be diligent, remain conscious of potential phishing emails, always refuse to give credit or debit card numbers over the phone, and check credentials. Do this and you can decrease your odds of falling victim to such tax scams or IRS fraud.
Q&A: What do you do if a tax return is filed without your permission?
Often taxpayers do not realize that someone has filed a return using their SSN without their permission until they attempt to file a return themselves. Once the IRS has received a return for the tax year, a return using the same SSN will no longer be accepted. If you believe that a tax return has been filed using your SSN without your permission, it is advised that you call the IRS Identity Theft Hotline at 1-800-908-4490 as soon as possible. The IRS should provide instructions for filing which may include the use of a paper return and inclusion of a explanation of the circumstances.