Tax Scams: Don’t Fall For It

Tax Scams: Don’t Fall For It

As the filing deadline gets closer, the pressure builds. Unfortunately, along with that pressure comes the increase in tax scams with promises to relieve the tax-filing burden or the reduction of tax liability.

Quick, raise your hand if you’ve received an email, phone call or text from someone from “the IRS” who is “collecting a past due tax bill”.  Better yet, raise your hand if you haven’t.  Most of us have, and unless you know the signs of a scam, you can fall victim to all sorts of bad outcomes.

First rule-of–thumb (repeat after me): The IRS does NOT initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. 

How to spot a scammer. The following are some specific things scammers will do to initiate their deceit:

• Use of fake names and IRS badge numbers to identify themselves.
• Scammers may know the last four digits of your Social Security number.
• Scammers spoof caller ID to make the phone number appear as if the IRS or another local law enforcement agency is calling.
• Scammers may send bogus IRS emails to victims to support their bogus calls.
• Victims hear background noise of other calls to mimic a call site.
• Scammers demand immediate payment of taxes by prepaid debit card or wire transfer.
• Scammers promise large refunds upon providing personal information.

Don’t fall for it! After threatening victims, with jail time or with driver’s license or other professional license revocation, scammers hang up. Other scammers will then call back pretending to be from local law enforcement agencies or the Department of Motor Vehicles, and caller ID again supports their claim. 

The following is a list of things the IRS will NEVER do:

• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
• Threaten to immediately bring in local police or other law-enforcement groups to have you taxpayer arrested for not paying.
• Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
• Ask for credit or debit card numbers over the phone.
• Call about an unexpected refund.

The IRS publishes an annual list of 12 most commons scams known as the “Dirty Dozen”:

1. Phishing: Fake emails or websites looking to steal personal information. Don’t open.
2. Phone Scams: Threats, scare tactics. Don’t panic.
3. Identity Theft: Request of personal info. 
4. Return Preparer Fraud: Promising expertise.
5. Inflated Refund Claims.
6. Falsifying your income to claim tax credits.
7. Falsely Padding Deductions on Returns. 
8. Fake Charities: Research your donation.
9. Excessive Claims for Business Credits.
10. Offshore Tax Avoidance. 
11. Frivolous Tax Arguments: The use of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite being repeatedly thrown out in court. 
12. Abusive Tax Shelters.