Officials from the IRS are warning about “IRS impersonation scams,” in which criminals impersonate IRS personnel to steal money or personal information. The latter can result in identity theft, which allows criminals to file tax returns in the victims’ names and take their refund, among other things.
According to reports filed with the Federal Trade Commission, taxpayers lost more than $4 million last year to scammers posing as the IRS, with a median loss per the complaint of $515. (FTC).
Criminals are well aware that filing taxes may be difficult and that anxious consumers are more vulnerable to phishing schemes in which scammers deceive them into giving up personal and financial information.
They also know that many taxpayers are so afraid of the IRS that they’ll do anything to avoid paying the taxes they believe they owe, including sending money or gift cards.
Common Tax Scams
Fraudulent Tax Preparers
While the vast majority of tax professionals are trustworthy and provide legal services, there are some others who you have to be careful about. Scams perpetrated by these persons might take a variety of forms. Unscrupulous tax preparers will sometimes falsify information on returns to increase a refund, while others will try to steal personal information from tax records.
Text Message Scams
Messages with false URLs claiming to be IRS web pages or other online resources are used in text hoaxes. There was an upsurge in texts mentioning Covid-19 and stimulus funds last year, for example.
The IRS does not use texts (or social media sites) to discuss personal tax problems like bills or refunds.
The IRS advises everyone not to open attachments or click links in unsolicited, suspicious, or unexpected text messages, whether they come from the IRS, state tax agencies, or other members of the tax community.
Tax Refund Fraud
You’ve probably heard that you should file your tax return as soon as possible since someone else could file a return in your name and take your refund.
You might not notice someone has submitted a false tax return until you try to file your own and find that “you” have already done so. Unfortunately, fraudsters can use bits of data to file a fake return without even having access to a W-2. Suppose someone knows enough personal information about you to file a tax return, such as your Social Security number and contact information. In that case, they are almost guaranteed to have access to other aspects of your identity or money.
Criminals typically send pre-recorded, urgent messages asking for a callback and threatening victims with arrest warrants, deportation, or license revocation if they do not.
Thieves can disguise the genuine caller ID number to make it appear as if the call comes from the IRS, a local sheriff’s office, the state department of motor vehicles, or another government agency.
Callers may be asking for payment for an outstanding tax bill. On the other hand, the IRS will usually send a bill to taxpayers first.
Phishing, which involves obtaining personal information through phony emails, adverts, or websites, occurs all year. Hackers typically send what’s known as a phishing email, which imitates an email from a retailer, corporation, or friend and includes a link to a fake site asking for personal information.
How to Prevent Tax Scams?
Make it a top priority to file your taxes as soon as feasible. Every year, the IRS uncovers many cases of identity theft, in which criminals utilize stolen personal information, such as Social Security numbers, to file a tax return early in the season and claim a refund.
The IRS also suggests going to IdentityTheft.gov to acquire a customized recovery plan, including notifying credit bureaus, the Federal Trade Commission, and local law enforcement.
It’s important to note that the IRS does not send emails or texts. Before sending agents to your house suddenly, it rarely calls and usually sends many letters.
The IRS does not contact taxpayers through email to request personal or financial information. A person who owes taxes usually receives a paper bill from the IRS initially. The IRS may contact or visit a house or company under certain circumstances.
A lot of identity theft is done in a low-tech manner. It all starts with your Social Security number being in the wrong hands. It may be as simple as misplacing your wallet or smartphone, including information that a data thief might be interested in.
Leave any paperwork, including your Social Security number, at home, and make sure your smartphone is locked. Avoid installing sensitive data onto your devices if at all possible.
Make sure you’re dealing with a reliable firm and a respected professional when you’re looking for someone to assist you with completing your taxes.