Tax season can be a particularly active time for fraud and identity theft, especially because technology can make it easier for criminals to pose as the IRS. Tax season is a stressful time because you are reviewing financial documents under a tight deadline. This can create conditions for unsuspecting tax filers to fall prey to scammers. The following information can help you spot scams.
IRS Phone Scams
Tax season scams aren’t necessarily advanced. For example, consider the IRS impersonation phone scam, in which the victim receives a phone call or voice mail message from someone claiming to be from the IRS. The fraudster insists that you must pay your taxes now — via a wire transfer — or else there will be negative consequences. The IRS does not make phone calls demanding immediate payment; they will mail you bills if money is owed.
Fraudulent Tax Returns
Another tax season scam is one in which a fraudster files a tax return on behalf of another individual in hopes of receiving that individual’s refund. Unfortunately, with wealthy Americans seeing their tax refunds increase in recent years, such individuals can be attractive identity theft targets.
Emails from Fake Tax Agencies
An email from a fake tax agency has emerged as another scam. In this scheme, the victim receives a letter threatening an IRS lien or levy, based on bogus delinquent taxes owed to a non-existent agency, with a name such as “Bureau of Tax Enforcement.” The IRS cautions that there is no such agency, and “the lien notification scam also likely references the IRS to confuse potential victims into thinking the letter is from a legitimate organization.”
Fraudulent Tax Return Preparers
The “ghost” tax return preparer is another potential danger. According to the IRS, a ghost preparer is paid to prepare a tax return but does not sign it, either electronically or on paper.
These fraudulent tax preparers may be engaged in one or more of the following:
● Requiring an upfront cash payment as part of the expected refund.
● Claiming fake deductions to enable the victim to receive a larger refund.
● Directing refunds into their own financial account rather than the taxpayer’s account.
Be sure to fully vet your tax preparer and verify that they sign your tax return.
Tax Transcript Phishing Scam
Tax transcript phishing emails are yet another scam to be on the lookout for. This is a version of a basic phishing scam, in which fraudulent emails purporting to be from the IRS are sent to individuals hoping that victims will open them, click on links leading them to fake IRS websites, and enter their credentials on the fake website.
The tax transcript version of this is a bit more sophisticated and will have an attachment labeled “Tax Account Transcript” or something similar, and the subject line uses some variation of the phrase “tax transcript.” The IRS reminds taxpayers it does not send unsolicited email messages to the public and it would never send a sensitive document such as a tax transcript, which is a summary of a tax return.
This scam is worse than a basic phishing email because the attachment, once double-clicked and downloaded, most likely contains malware that can infect your computer as well as other devices on your network.
With some extra vigilance, individuals can protect themselves against fraudsters not just during tax season but also moving forward. It’s helpful to use a range of measures to ensure that your assets are protected.