Three Tax Scams To Avoid

With the next tax season just around the corner, it’s time to start thinking about getting all your documentation for your filing. But that’s not the only thing you need to think about. 

Tax scams continue to increase each year, particularly as more Americans file their returns online without the help of a tax professional. Learn what you need to watch out for with the three biggest tax scams that criminals try to use to steal your information and money and how you can protect yourself this tax season.

Phishing Emails

We’ve all seen a suspicious email or two by now—the ones that look like they’re from legitimate companies but aren’t quite right. During tax season, emails from what appears to be the IRS can land in many inboxes, but scammers are really using these to trick individuals into handing over their personal information.

How to Identify Them

The biggest tell in a phishing email is that there are usually typos in multiple places, along with poor grammatical choices. There’s typically a false sense of urgency in the tone of the message, urging people to react without thinking.

These emails typically contain links that take users to fake websites where their personal details are stolen or, worse, malware is downloaded onto their devices for additional theft.

The email address from which the email is sent is usually wrong in some way, such as a misspelling of a company name or punctuation in strange places. This is often a sign that this email is fraudulent.

Prevention Tips

Whenever you receive an email from someone you don’t know, never click on a link or open any attachments. Even if the email looks legitimate, verify the sender and look for other clues within the body of the email before clicking or downloading anything.

You should always check who the sender is to verify their identity. For instance, all IRS emails will come from an @irs.gov email address if it’s legitimate communication. No government agency or financial institution will ask you for your login details like password or anything personal like your Social Security Number, date of birth, or personal financial information via email.

If you think you may have received a suspicious email, contact the source you think it’s from directly through verified channels to confirm the legitimacy of the email.

Tax Preparer Fraud

Many people seek help in filing their taxes, particularly if they have complex financial needs or run a small business. Scammers know this and take advantage of people looking for this support, posing as tax professionals to acquire sensitive personal and financial data illicitly. These fraudsters will exploit people throughout the year, especially around filing deadlines.

How to Identify This

All legitimate tax preparers are required to have a Preparer Tax Identification Number (PTIN) issued by the IRS. Without one, this is a significant red flag that the individual you’re dealing with may not be a real tax preparer.

Fraudulent preparers may also promise you a much higher refund than you’re likely to get, structuring their fees around your refund amount. Legitimate preparers will charge you either a flat rate or an hourly fee, not based on the size of your refund. 

Prevention Tips

Always ask for your preparer’s PTIN and verify it against the IRS’s official website. You should also look for referrals for accountants and tax preparers, first from trusted friends or coworkers, or from online sources that offer true reviews.

You should always make sure that any refund you are expecting comes directly to you, either into your bank account or the check mailed to your home. It should never be deposited into your preparer’s account first.

Impersonation Phone Calls

Impersonation phone calls are much like phishing emails but happen over the phone instead of by email. Scammers will call you, posing as IRS officials, and will aggressively demand you make immediate payment for allegedly owed taxes. 

These calls are designed to intimidate you into making a hasty decision, or handing over financial information over the phone that they can then use to steal from you further. Responding to these calls can result in significant financial losses, as well as identity theft.

How to Identify These

The most obvious sign that a call is a scammer is the aggressive language and tone that they use while speaking to you. They may even threaten you with legal action or severe consequences like arrest or deportation if you don’t make a payment immediately.

They may also ask for payment to be made in specific ways, like through gift cards, prepaid debit cards, or wire transfers. No legitimate authority will ever ask you to do this, so this should be a red flag immediately that something isn’t right.

Prevention Tips

Understand that the IRS nor any government agency will ever demand that you make an immediate payment to them over the phone. They certainly won’t ask you to pay in a specific way like with gift cards or wire transfers.

If you’re concerned that the call is suspicious, hang up straight away and do not engage with the caller. The longer you stay on the phone with them, the more likely it is that you’ll feel pressured into revealing personal information.

Don’t Fall For a Scam

Always report any suspicious emails, calls, or behavior to the IRS through their impersonation scam reporting webpage. You can also contact the U.S. Treasury Inspector General for Tax Administration.

You should also reach out to your bank if you think you may have become a victim of a scam or tax fraud. The team at Dieterich Bank can help you through the next steps to lockdown your financial accounts and protect your finances that remain untouched by scammers. They may also be able to help you file a report with local law enforcement.