Avoid Tax Scams — 6 Tips to Remember!

By Stephanie M. Casey, CPA, Tax Manager | Family & Executive Advisory Services Team

In October 2015, the Better Business Bureau launched a BBB Scam Tracker.  It provides a place for consumers across North America to report scams and fraud, and to warn others of suspicious activities.  In its first year of operation, tax scams have accounted for about one in four reports. In a typical week, the BBB Scam Tracker receives approximately 200 reports on tax scams.

Common Tax Scams

In recent years, thousands of people have lost millions of dollars and their personal information to tax scams and fake Internal Revenue Service (IRS) communication.  Several of the top scams according to the IRS are:

Fraudulent Filed Returns

Tax-related identity theft occurs when someone uses your stolen Social Security Number (SSN) to file a tax return claiming a fraudulent refund.  You may be unaware that this has happened until you efile your return and discover that a return already has been filed using your SSN. Or, the IRS may send you a letter saying we have identified a suspicious return using your SSN.

IRS-Implementation Telephone Scams

Callers claim to be employees of the IRS, but are not. These con artists can sound convincing when they call. They use fake names and bogus IRS identification badge numbers. They may know a lot about their targets, and they usually alter the caller ID to make appear as if the IRS is calling. Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting. Or, victims may be told they have a refund due to try to trick them into sharing private information. If the phone isn’t answered, the scammers often leave an “urgent” callback request.

Email, Phishing and Malware Schemes

The IRS saw an approximate 400 percent surge in phishing and malware incidents in the 2016 tax season.  Scam emails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. These phishing schemes can ask taxpayers about a wide range of topics. Emails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying Personal Identification Information (PIN) information. When people click on these email links, they are taken to sites designed to imitate an official-looking website, such as IRS.gov. The sites ask for Social Security numbers and other personal information, which could be used to help file false tax returns. The sites also may carry malware, which can infect people’s computers and allow criminals to access your files or track your keystrokes to gain information.

As the 2017 filing season comes around, there is an increase predicted in the scamming area. These criminals are looking for SSNs, passwords, PINs, bank account numbers or credit card numbers.  Scammers will sometimes ask you to pay your “tax bill” using Itunes or other gift cards.

6 Tips Avoid Tax Scams

The IRS will NOT:

1. Initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information.
2. Threaten taxpayers with lawsuits, imprisonment or other enforcement action.
3. Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill (old fashioned sytle via the US Postal Service) if you owe any taxes.
4. Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
5. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
6. Ask for credit or debit card numbers over the phone.

Being able to recognize these tell-tale signs of a phishing or tax scam could save you from becoming a victim.

Questions on this topic? Contact your Keiter representative or Email | 804.747.0000

Sources: Palm Beach Post, Better Business Bureau, and IRS

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