Published by Taylor Financial Group
Each year, the IRS releases a list of the top most common tax scams they have encountered. Being aware of these scams can help you avoid becoming a victim. The damage caused from falling victim to a scam can take years to correct. In addition, you can experience significant financial losses, and destruction to your credit. We discuss below some of the more common scams.
One of the most common scams is the phishing scheme. This type of scam includes false emails and websites that attempt to receive private security information such as login credentials, passwords, Social Security numbers, credit card information, and bank account information. Then, the information is stolen and used maliciously, whether it is to steal funds, or an identity. Often times, big companies, human resource departments, government agencies, individual taxpayers and tax preparers, are victimized by this type of scam.
Scams by Phone
Phone scams are also on top of the list this year. Threatening phone calls and aggressive demands for payment of supposed owed taxes are on the rise. Some extreme measures are taken to demand prompt payment by untraceable means, such as threats of deportation, license revocation, and police arrests. Often, vulnerable elderly are the victims because they are more likely to give up this information. Be informed of the true facts! According to the IRS, they would never demand payment via phone nor would they make aggressive threats, and communications regarding taxes owed to the IRS would come via regular mail.
Shady Tax Preparers
Criminals view tax season as a time of opportunity. There are a variety of ways that scams can occur during tax season. Be cautious about the tax preparer you choose. Some may contact elderly or low-income taxpayers who normally don’t file and file returns claiming inflated refunds for them (or stealing their identities and keeping any refund). Ensure that they are appropriately credentialed and are preparing your taxes according to the regulations with your best interest first. You can visit the Federal Directory of tax return preparers, which lists tax preparers with their credentials and qualifications.
Many times, scammers set up fake charities to get money and personal information from innocent tax payers who don’t know better. They accomplish this by creating names for charities that sound similar to other well-known charities, or by creating charities following natural disasters claiming to be raising money for those affected by the disaster. Be cautious of these types of charities and never donate to a charity you haven’t donated to before without first checking the Exempt Organization Select Check on the IRS website to confirm the charity is real.
Prevent Becoming a Victim of Tax Scams
There are some tactics you can use to prevent scams from occurring. Avoid carrying around or giving out your identity information such as your Social Security card or number. Do not provide detailed, personal information or payment information over the phone. If you receive a phone call, email or regular mail that is threatening or suspicious, trust your instincts. Be cautious of the links and emails you open. If the sender is unknown, or the email is requesting personal information or demands for money, do not provide such information. And report any incidents to the authorities promptly.
To avoid shady tax preparers, try to work with tax professionals who have been recommended, and always ensure they have the proper credentials. Take a look over your prepared tax return, if any of the information, expenses or refund amounts seem unrealistic or inapplicable, ask questions, or seek a second opinion.
As always, feel free to contact us if you have any questions or concerns.
Journal of Accountancy, Dirty Dozen Tax Scams Led by Phishing Schemes by Sally P. Schreiber, JD, February 17, 2017
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