Common Tax Scams and Prevention
Written by Cooper & Friedman PLLC on April 27, 2021
Tax scams are no joke. Individuals, businesses, and even tax professionals lose millions of dollars and personal information each year to scammers. Often pretending to be IRS agents or tax preparers, these criminals will reach out via email, mail, phone calls, text messages or even social media. Tax scams are always evolving, feeding off your sense of anxiety and urgency around taxes and private information. Indeed, anyone can be vulnerable to a tax scam, but the first step in preventing them is to become well-informed. Follow along to learn about 5 common tax scams, as well as how you can prevent fraud yourself.
The IRS will never, ever email or text you. This means that any electronic communication you think you’ve received from them is fraudulent. In rare incidences, they’ll send mail via USPS, and then call you if you fail to respond. Real IRS agents will never leave prerecorded voicemails, threaten you, or ask for any personal information like credit card numbers or your SSN online. If you receive communications from a fake IRS agent, email it to email@example.com or file it on FTC.gov/complaint or IRS Impersonation Scam Reporting web page.
One type of email scam came from criminals posing as IRS agents. Under such headlines as “Automatic Income Tax Reminder,” “IRS Online,” or ”Electronic Tax Return Reminder,” these emails would pose as containing your tax return information or tax transcripts. Then, when you open the links or documents, malicious software downloads to your computer. Remember, the IRS will never email you, or send/request unsolicited sensitive information of any kind.
Taxpayer Advocate Service Scams
Another recent tax scam are fake calls from the Taxpayer Advocate Service (TAS), a division of the IRS. “Spoofing” on real IRS phone numbers, these criminals will call you or leave voicemails requesting personal information like SSN or individual taxpayer identification number (ITIN). They may use fake names, fake badge numbers, or know the last four digits of your SSN. Remember, the TAS would never call you without prior correspondence. Hang up immediately, and report the number to the IRS Impersonation Scam Reporting web page or call 800-366-4484.
Tax Preparer Scams
Yet another scam comes from fraudsters posing as tax preparers. Desperate for help with taxes, some people accidentally select scammers from the plethora of cheap and online tax preparers. These phony preparers may ask for payment up-front, ask you to sign blank forms, or ask for a percentage of your returns. A real tax preparer would not ask you to do these things, and would always sign above you with their preparer tax identification number (PTIN). Choosing a tax preparer from a reputable, preferably local agency is advised. If you have issues with your preparer, submit the Return Preparer Complaint Form to the IRS.
How You Can Prevent Tax Scams
Besides being aware of common scams, taking precautions to protect your data and identity can help prevent scams as well. Installing security software on your computer, using strong passwords and multi-factor authentication tools, and getting an IRS Identity Protection Pin can all help improve your safety.
Staying up-to-date on the latest scams and investigations via https://www.treasury.gov/tigta/ can boost your safety. Also, educating and watching out for older family members or friends who are more susceptible to scams can help. It should be known that as a taxpayer, you have a number of rights, and any infringement upon these can suggest fraudulence.
When You Are a Victim Of A Scam
In a worst-case scenario, you experience a tax scam without even realizing it. Then, days or months later, something happens that indicates the extent of the fraud. Perhaps you go to file a tax return, and the IRS rejects it because it is already filed. Or, on the other hand, you receive a tax refund you didn’t even file for!
If you believe you’re a victim of tax fraud, there a number of actions you can take. You can fill out the IRS Identity Theft Affidavit, follow the steps on identitytheft.gov, or file a police report. Depending on the type of scam, it may also be smart to freeze credit cards.
If you or a loved one have been a victim of a tax scam, you deserve equitable treatment and fair compensation for your emotional and financial losses. Contact Cooper & Friedman Attorneys At Law today at 502-459-7555 to schedule a free initial consultation.