Top 3 Tax Scams to Watch Out
In an effort to keep you and your loved ones informed and protected, let’s take a look at the top three scams anticipated for the upcoming tax season:
1. Identity Theft
Most of us are familiar with general identity theft having at least known someone affected by it, if not victimized ourselves. Tax identity theft results in a scammer claiming a fraudulent tax refund using your social security number. Often times you won’t know that this happened until you go to file your tax return and receive a rejection notice, informing you that a tax return has already been filed using your SSN.
The IRS offers warning signs for this type of fraud including:
- An offset refund
- Collection notices for a year that you did not file a return
- IRS records indicate that you received wages from an employer for whom you did not work
If you find that you are a victim of tax identity theft, the IRS asks that you complete form 14039, an Identity Theft Affidavit. In the meantime continue to pay your taxes and file a paper copy of your tax return while the theft is being investigated.
2. Phone Scams
Scammers use scare tactics over the phone to trick you into giving away your personal information and money. If you receive a call from someone claiming to be from the IRS demanding an immediate payment or threatening you with a litigation, hang up. This is a scam.
If you have an outstanding balance, the IRS will always contact you via mail and will never demand immediate payment over the phone.
As discussed on CNN.com , phone scammers often:
- Alter their caller ID to appear as if they’re calling from an IRS office, DMV, or police department
- Threaten people with arrest, deportation, or litigation if payment is not made immediately
- Target the elderly
- Demand that payments be made with prepaid debit cards
- Say that you have a refund due and ask for your personal information so that you can claim it
If you are unsure about whether you have an outstanding tax liability, contact your tax advisor who can provide you with the correct phone numbers for the IRS, or correspond with the IRS on your behalf.
Phishing, the act of stealing a person’s financial information by posing as a legitimate company, remains to be a growing problem. One of which tax scammers have jumped on the bandwagon. Phishers often send emails posing as IRS agents and include fake links to their websites which look very similar to the actual IRS website. The emails will often prompt you for your personal information, or when opened, install malware on your computer. This gives the scammer access to your device and allows them to track your key-strokes or access your documents.
In September of this year, the IRS warned the public of a phishing scam where fake IRS notices were being issued. These notices, which are generated when information on file with the IRS doesn’t match the information on your tax return, are requesting payments to satisfy outstanding balances.
- IRS notices sent by email (the IRS will never email a notice)
- The use of an Austin, Texas post office box
- Requested payments to the “I.R.S.” at the “Austin Processing Center” (tax payments are payable to the “United States Treasury” not the “I.R.S.”)
- Emails that contain a payment link
- Notices that use a letter number of “105C”
In general, it’s a good idea not to open unexpected emails from unknown senders and to think twice before providing your personal information to anyone over the phone or online. Remember that the IRS does not use scare tactics to collect on unpaid tax liabilities and will only contact you via mail. If you do receive IRS phishing emails, report it at firstname.lastname@example.org in order to help protect other people from falling victim to these tactics.
Delap LLP is one of Portland’s largest local tax, assurance, wealth advisory, and information security consulting firms, located in Lake Oswego, Oregon.