Tax Scams To Look Out For
“Cybercriminals love tax season. The enormous amounts of valuable personal and financial information that are
shared online during this timeframe make it a haven for hackers. Since most Americans are filing their taxes,
deadlines are looming and the cyber thugs are doing everything they can to take full advantage of the opportunity.”
– Russ Schrader, Executive Director, National Cyber Security Alliance
Tax season is upon us. As you get all of your documents and forms in order to prepare for filing, please be wary of these common scams that we see every tax season.
- PHISHING: Be on the lookout for fake emails that are trying to steal your personal information or infect your electronic device with malware. Never open these emails, click on any of the links, open any of the attachments, or reply back. Often the criminals who send these phishing emails pose as: a business asking the recipient to pay a fake invoice, an employee seeking to re-route a direct deposit, or someone you would recognize, such as your boss, to initiate a wire transfer. Another red flag that indicates you’ve received a phishing email, is if the email appears to be from the IRS, promising a refund or threatening the person. The IRS will never initiate a conversation regarding a refund or bill via email. Learn how to quickly spot a phishing email here.
- PHONE SCAMS: Every tax season, we all see the influx of phone scams, specifically criminals claiming to be from the IRS. There is typically a sense of urgency to these calls with threats of arrest, deportation, and license revocation. These criminals will demand immediate payment, in the form of a wire transfer, prepaid debit card, or gift card. Please, know: the IRS will never demand immediate payment with the previously listed payment methods, the IRS will generally first mail the bill, the IRS will never threaten to call law enforcement on you for not paying, and the IRS will never ask for a credit or debit card over the phone.
- RETURN PREPARER FRAUD: Be very careful when choosing a tax professional, do your research and ask around. You should only select someone who you trust, has a solid reputation, has an IRS Preparer Tax Identification Number, and has the appropriate credentials and qualifications. Scam preparers either don’t understand taxes or intentionally mislead people into taking credits and/ or deductions that they aren’t entitled to take, in order to increase their fee.
- INFLATED REFUND SCAMS: Stay away from preparers who promise large and inflated tax refunds. These criminals often advertise their services with flyers, a phony storefront, and word-of-mouth. These con artists will make claims for factitious rebates, benefits or tax credits and often falsify forms like the 1099 and W-2. They may even file a false claim in your name and collect your refund. Never sign a blank or partially filled out return. At the end of the day, you and only you are legally responsible for your tax return. Even if you were scammed, you will be held accountable by the IRS and may face a number of penalties including imprisonment and a $5,000 fine. It’s worth repeating, be very careful when choosing a tax professional.
- FAKE CHARITIES: Be wary of people and groups that pose as a charitable organizations. Always take the time to research charities before you gift any money, services, or goods, as your donation may not be eligible for a tax deduction. These fake charities will often use names similar or familiar to well know organizations to trick you. Always confirm the legitimacy of a charity using the search feature, Tax Exempt Organization Search, at IRS.gov.
See more tax scams that the IRS has highlighted here.