With the deadline for employers to mail W-2 Forms and businesses to furnish 1099 Forms quickly approaching, Americans are gearing up to prepare their taxes in preparation for the April 15th Federal Income Tax deadline.
Armed with their tried and true methods of years’ past coupled with new methods, scammers are also gearing up for another tax season. Each year during tax season, thousands of people lose millions of dollars and their personal information to tax scams. Scammers use the U.S. mail, telephone, and email to target individuals, businesses, and tax professionals.
Here at Guardio, we want to make sure that you know the telltale signs of these tax scams so that you can recognize and avoid falling victim to tax season scams.
IRS Processes You Should Know
The IRS doesn’t initiate contact with taxpayers by email, text, or social media
If you receive contact from someone claiming to be with the IRS through one of these channels, immediately discontinue contact. There is absolutely no chance that you’re speaking with a legitimate representative of the IRS.
Instead, the IRS initiates most contact through U.S. mail delivered by the United States Postal Service. For limited circumstances, the IRS may call or come to a home or business, but only when attempts to reach a taxpayer by mail using the address on their most recent tax return have been unsuccessful. Circumstances that might warrant a phone call or home visit include overdue tax bills, to secure a late tax return, employment tax payment, or to tour a business as part of an audit or criminal investigation. Before reaching this point, however, the taxpayer would have received several letters from the IRS by mail.
IRS representatives who visit in person will always furnish two forms of official credentials. These include a pocket commission and a HSPD-12 card. You have the right to ask to see these credentials and can verify information from the HSPD-12 card by calling a dedicated IRS telephone number. These IRS collection employees will never demand an immediate payment to a source other than the U.S. Treasury.
The IRS will never demand immediate payment using a specific payment method.
If someone claiming to be with the IRS demands immediate payment from a specific payment method like a prepaid debit card, gift card, money order, or bank transfer, you are not speaking to a legitimate representative of the IRS.
Instead, the IRS will always mail a bill to any taxpayer who owes taxes from years’ past or who didn’t remit payment along with their annual or quarterly taxes. Your bill will include a due date or show that it is “past due”. The IRS does not accept payment by phone, will not accept gift cards, and will not specify which payment method you must choose. The IRS instructs taxpayers to make payments to the United States Treasury. They provide specific instructions for taxpayers who need to make a payment at https://www.irs.gov/payments .
The IRS will not use scare tactics to obtain your tax obligations.
If an IRS agent threatens to have you arrested by bringing in police, immigration officers, or other law enforcement personnel or if they threaten to revoke your driver’s license, business license, or immigration status, you are speaking with an imposter.
When requesting payment, the IRS will always allow you to question or appeal the amount they say you owe and will always advise you of your rights as a taxpayer. While the IRS can bring you to court regarding any amounts you owe, the IRS cannot have you arrested or deported on the spot, nor do they have the authority to revoke licensure. These things can only be done through due process in a court of law.
Scams You Should Be Aware Of
Social Security Number Scam
Scammers use robocallers to alert taxpayers of problems with their tax returns or with their payments. In these calls, scammers threaten to suspend or cancel the victim’s social security number. If you receive a call like this, know that it did NOT come from the IRS and that the IRS does not have the ability to cancel or suspend your social security number. Instead, simply hang up and block the phone number from calling again.
Email Phishing Scams
Scammers create phishing emails notifying taxpayers of taxes owed or of their refund status. The emails include a link that leads victims to a malicious website designed to look similar to the IRS website. On the malicious website, victims are asked to enter their social security number and other basic information to access the status of their return, but instead, this information is sent over to attackers to use for their own financial gain and to commit identity theft.
Clean up your browser and prevent future scams
Email Malware Scams
Similar to tax phishing scams, email malware scams begin with a fake email notifying taxpayers of taxes owed or of their refund status. These also include a link that leads victims to a malicious website designed to look similar to the IRS website. This time, instead of requesting personal information from the victim, the website instructs the user to download their “important message” from the IRS. Instead of receiving that important message, victims find that they have just downloaded malware instead. Remember: The IRS never sends unsolicited emails and never emails taxpayers about the status of refunds. Refund information can be found at https://www.irs.gov/refund
Ghost Tax Preparers
Unethical tax return preparers, known as “ghost preparers” are a threat to U.S. taxpayers. Under U.S. law, anyone who is paid to prepare or assist in preparing federal tax returns must have a valid Preparer Tax Identification Number (PTIN). Paid preparers are required to sign the return and include their PTIN. Ghost preparers do not sign the return and instead tell the taxpayer to sign and mail it to the IRS.
These tax preparers benefit financially by promising a big refund by charging fees based on a percentage of the refund. They use dishonest tactics to erroneously qualify their clients for tax credits and deductions to boost their refunds and require payment for their service in cash only. The IRS often catches these false deductions and credits, resulting in audits that leave the taxpayer, not the ghost preparer, responsible for paying back the difference and facing potential criminal liabilities. For help choosing an ethical tax preparer, visit https://www.irs.gov/tax-professionals/choosing-a-tax-professional
How Can I Avoid Falling Victim to Tax Scams?
Always Use Browser Protection
With browser protection, if you click on an IRS link that turns out to be a fake, instead of having a chance to fall victim to a scam, browser protection will block the site. This means that you never have a chance to accidentally download malware or send your information to an identity thief online.
Educate Yourself About Tax Scams
By reading the information in this article and staying up to date on other articles posted by Guardio, you can stay ahead of scammers by understanding their methods and identifying when you’re being targeted by a scam.
File Your Taxes Early
If you’ve been a victim of identity theft (whether you know about it already or haven’t yet learned), it’s important to file your taxes early. If an identity thief files on your behalf, it can be very difficult to correct the situation, but if they file after you, it’ll immediately send red flags to the IRS that something isn’t right so steps can be taken to secure your information.
Verify That You Are on the Legitimate IRS Website
Government-run websites in the United States will always include .gov in the URL. The IRS website is https://www.irs.gov. If you are on a website claiming to be associated with the IRS or another government entity that does not include .gov, leave the website immediately.
Only Send Tax Payments to the US Treasury
The IRS will never ask you to wire money, do a bank transfer, or provide card information by phone or email. Instructions for making tax payments is found at https://www.irs.gov/payments