Protecting Yourself from Tax Scams
Introduction
It’s tax season again, which means scammers are out in full force trying to steal your money & personal information. Tax & income tax scams come in many forms, from phishing emails to threatening phone calls demanding immediate payment. While scammers use ever-evolving tactics, you can protect yourself by understanding common scams & learning how to spot red flags.
Common Tax & Income Tax Scams to Watch Out For Phishing Emails & Links
One of the most common techniques scammers use is to send convincing-looking emails or text messages pretending to be from the IRS, your state tax agency or a tax software provider. These messages often say you are eligible for a big refund or owe back taxes. They try to lure you into clicking links or opening attachments loaded with malware. Always confirm the sender via other channels before clicking anything.
Threatening or Urgent Calls
Scammers may call you directly, claiming to be from the IRS or local tax authority. They say you owe money & must pay immediately via difficult-to-trace methods like gift cards or prepaid debit cards. Some even threaten arrest or other legal action. Remember, the real IRS will always contact you by mail first about unpaid taxes, not by phone.
Fake Tax Preparers
Watch out for “preparers” who promise inflated refunds by fudging numbers or claiming fake deductions & credits. Only provide personal information to trusted, certified tax professionals. Check credentials & search for reviews before hiring someone to do your taxes.
Identity Theft
Tax ID theft happens when someone files a return using your Social Security Number (SSN) (or Aadhaar Number in India) & other personal info. File as early as you can to cut off potential identity thieves. Also be vigilant in protecting your SSN, storing tax documents securely, & watching for any fraudulent administration activity.
Fake Charities
Scammers take advantage of tax season generosity by impersonating real charities or making up bogus causes. Do your homework before donating to ensure the charity is real. Stick with established organisations or lesser-known groups on Charity Navigator & similar watchdog sites.
How to Spot Tax Season Scams
While the variety of scams is endless, most share similar red flags:
- They create urgency or pressure: Scammers want to rush you into immediate payment before you detect the scam. Slow down & verify any demands.
- They request unusual payment types: The IRS & other legitimate entities will never require payment via gift cards, wire transfers, cryptocurrency, etc. These are telltale signs of a scam.
- They threaten you: Threats of immediate arrest or other legal punishments signal a scam attempt. Again, the real IRS starts by mailing official letters about tax debts.
- Their info seems off: Double check the phone number, email address, official website & any other contact info against the real deal. Subtle differences can reveal an impersonator.
- You didn’t initiate contact. Unsolicited calls or emails “from the IRS” are almost guaranteed to be scammers fishing for victims.
- Their tactics push emotional buttons: Scammers want you to be panicked, fearful or too eager (about a refund) to think critically. Remain composed & don’t let emotions affect your judgement.
How to Report Tax Scams
If you encounter a tax scam, there are a few places you can report it:
- IRS: You can report IRS imposter scams directly to the IRS at IRS.gov. They use reports to investigate fraudsters & warn others.
- FTC: The Federal Trade Commission takes reports on its website, FTC.gov, under the “Report Fraud” section. They prosecute scammers when able.
- Tax Software Company: If scammers spoof a legitimate tax preparer or software company, inform them directly so they can address it.
- Local Police: For scams targeting you locally, also file a report with your local police department.
- State AG: Your state attorney general’s office often has a consumer protection division that takes scam reports seriously.
The more people report fraudsters, the better chance there is of shutting them down or warning other taxpayers. Don’t be embarrassed if you got scammed; just take steps to prevent others from falling victim too.
Tips for Avoiding Tax Season Scams
Here are proactive ways to detect & deflect scams as you file your taxes:
- File early: Don’t give scammers a chance to steal your refund by filing as early as possible. Also, prepare returns accurately to avoid any legitimate issues.
- Know the signs: Educate yourself on common scam tactics so you can recognise red flags immediately. Trust your gut if something seems suspicious.
- Verify identities: Don’t assume a call or message is from who they claim. Independently look up official contacts to corroborate identities.
- Avoid clicks: Don’t click links or open attachments from unsolicited emails/texts about tax refunds or bills. Enter sites manually if needed.
- Ask questions: It’s fine to press “IRS agents” or “tax preparers” for full names, callback numbers, physical addresses & other info you can double-check.
- Know your protections: Understand your tax ID theft protections so you can spot if someone fraudulently tries filing on your behalf.
- Check reporting options: Know the various agencies you can report scams to to help authorities build cases.
Conclusion
As we’ve explored throughout this blog, tax season brings with it a surge in scams targeting unsuspecting taxpayers. From phishing emails & threatening phone calls to fake tax preparers & identity theft, the tactics used by scammers are diverse & ever-evolving. However, armed with knowledge & vigilance, you can effectively protect yourself & your financial well-being.
It’s important to recognise that anyone can be targeted by these scams, regardless of age or background. By staying informed, exercising caution, & sharing this knowledge with friends & family, we can collectively create a stronger defence against tax-related fraud.
As you navigate this tax season & beyond, remain alert, sceptical of unexpected tax-related communications, & proactive in protecting your personal & financial information. Remember, legitimate tax authorities will never pressure you for immediate payment or sensitive data through unofficial channels. By following the guidelines outlined in this blog & staying up-to-date on the latest scam tactics, you can file your taxes with confidence & peace of mind.
Stay vigilant, stay informed, & don’t let scammers turn your tax season into a stressful ordeal. Your financial security is worth the extra attention & care.
Key Takeaways
- Tax & income tax scams surge during filing season, with phishing, threatening calls, identity theft, & fake preparers among common ploys.
- Spot scams by watching for urgency, unusual payments, threats, incorrect details, unprompted contact, & emotional manipulation.
- Report scams to the IRS, FTC, tax software firms, police, state AGs, & other authorities to protect yourself & others.
- File taxes early, educate yourself on tactics, verify identities, avoid unknown links/attachments, ask questions, understand your protections, & know reporting options.
Stay alert to the latest scams & don’t fall prey to fraudsters looking to steal from taxpayers. Report any suspicious activity & exercise caution when sharing personal information. Diligent awareness is your best defence during tax season & beyond.
Frequently Asked Questions (FAQ)
What are some examples of real emails/letters from the IRS?
The IRS will only initiate contact via official letters sent to your last known address. These include notices about tax debts, audits, or response requests. Email is only used for very specific IRS services you sign up for.
How can I verify an alleged IRS caller?
Ask for their ID number & callback number, then hang up & call the IRS directly. Let them know about the call, & they can verify if it matches an actual IRS agent or auditor. If not, report the scam call.
Arerobocalls about taxes always scams?
Yes, there is no legitimate reason the IRS or a tax agency would use pre-recorded robocalls to contact taxpayers. These should be reported as scams.
What are some tips for finding a legitimate tax preparer?
Look for an IRS Preparer Tax Identification Number (PTIN). Check credentials like enrolled agent/CPA/attorney licencing. Search for online reviews & complaints. Ask about service fees upfront & avoid preparers who base fees on refund size or promise larger refunds.
What steps I would take if I suspected tax ID theft?
Contact the IRS Identity Protection Specialised Unit right away. Check your credit reports & existing tax accounts for any anomalies. Monitor tax records & credit lists closely.