Too many frauds have unfortunately cleverly conned thousands of people and businesses out of millions of dollars in tax scams. Don’t let yourself or your company become one of the victims.
Arm yourself instead with the latest insights into specific scams con artists will use to manipulate in an attempt to steal your identity and financial resources. Below are a few common examples of tax scams from the “Dirty Dozen”, a list compiled and updated annually by the IRS.
1. Phone Tax Scams
The IRS warns taxpayers about a “new twist on an old phone scam”. In the scam, thieves use telephone numbers that look like the IRS Taxpayer Assistance Center (TAC) office numbers to trick taxpayers into paying fake tax bills. TAC offices do not make calls to taxpayers to demand payment of outstanding tax bills. The caller ID is manipulated to appear that the IRS is calling.
If someone calls you and claims they are an IRS agent, you can be 100% confident it is an individual impersonating an IRS official to gain access to your personal or corporate information. Keep in mind, most people don’t realize the IRS is a severely underfunded organization, which means that queues for reaching an IRS agent to ask questions can be very long, thus an IRS agent will NEVER call you.
2. Phishing
Phishing tax scams happen when there are attempts by scammers to trick you into giving out personal information such as your Social Security number/ITIN or EIN, bank account information, passwords, etc. Remember that the IRS never contacts taxpayers by email to ask them to verify their personal information, so beware of any suspicious emails requesting such confidential information.
3. Identity Theft
This is a deliberate use of someone else’s identity, usually as a method to gain financial advantage or credit and other benefits in the name of another person. Somebody could pose as you or your business by stealing your EIN and try to apply for a credit card or a loan in your business name. It is important to constantly monitor your company’s credit records to prevent such tax scams from happening.
4. Tax Preparer Fraud
The IRS reminds consumers to be on the lookout for “unscrupulous” tax preparers and further protect their sensitive financial and tax data. The majority of tax preparers are honest and provide high-quality service, but there are some who are dishonest. These individuals tend to operate only during the filing season and try to perpetrate tax fraud, especially refund fraud. The two best ways to protect against this type of fraud are to file your taxes early and review your tax return.
The IRS will never do any of the following:
- Call to demand payment of a tax bill
- Threaten you for not paying taxes
- Ask for your debit or credit card numbers over the phone
- Demand that you pay taxes without giving you the chance to appeal or explain
Take precautions and respond to suspicious activity:
- When in doubt, don’t. Do not give out any information. Just hang up.
- Call the IRS directly at 1.800.829.1040 to clarify and discuss your specific situation
- Take extra care with your private and confidential documents
- Keep your mailing address up to date
- Use smart passwords
- Pay attention to fraud alerts
- Choose high quality tax preparers
Simply being aware of the common types of tax scams is one of the best things you can do to protect your personal and business data against fraud. If you can walk away with only one key takeaway from the above, we think “When in doubt, don’t!” just about covers it!
