Tax season is one of scammers’ favorites to gain and abuse the confidence of unwary individuals. Every year sees the emergence of new and creative ways to steal personal information from taxpayers, but knowing a few simple facts goes a long way for identifying what is real and what isn’t.
The IRS explicitly does not issue phone calls or emails asking for personal information or demanding payments. All communication between the IRS and taxpayers starts with mailed notices, and any communication afterwards will only be to inform individuals of any actions they need to take, not to collect. Scammers will do everything they can to appear legitimate, including fake caller IDs, fraudulent use of the IRS logo, and impersonating agents. Before taking any actions or revealing personal information, taxpayers are advised to verify whom they are speaking to on their own. The more aggressively a phone call or email attempts to gain sensitive information, the more likely it is to be a scam.
One of the most prevalent scamming methods involves criminals attempting to deceive people over the phone. They will do this by impersonating IRS agents, representatives of charities, or anything else they can use as a pretext to get valuable information from their targets. Pretending to be representatives of an organization people trust, they will use any angle, from using threats of penalties to offering special rewards and opportunities, provided the victim give over their credit card or Social Security numbers. Anyone who presses people for this kind of information is most likely a scammer.
Fraudulent Tax Preparation Services
The information included in every tax return is the responsibility of the taxpayer. However, many individuals use tax preparers to handle the details of their return. Most of these agencies provide excellent services to their clients, but it is important to verify their credentials, policies, and examine their work when it’s done. Tax preparers that make outstanding claims compared to their competitors may try to submit falsified information on the behalf of unknowing taxpayers to make money for themselves. These agents will often base their fee on how big the return is, and inflate a return illegally to increase their pay. Reputable agencies will be happy to display their dedication to educational and ethical standards that guarantee taxpayers the best return they can legally get.
IRS “Dirty Dozen” Tax Scams
Every year, the IRS compiles a list of the most prevalent schemes targetting taxpayers. People who are aware of these scams are more capable of filtering out any attempts by criminals to steal their money and identities, and are also warned to pay attention to the details of their return forms. In addition to phone scams, return preparer fraud, and fake charities, taxpayers should be on the lookout for:
- Phishing: Describes attempts to gain personal information through fake websites and email.
- Identity Theft: Especially common during tax season.
- Offshore Tax Avoidance and Hiding/Falsifying Income with Fake Documents: The IRS is getting better at finding hidden incomes and will act on any discoveries it makes both overseas and domestically.
- Excessive Claims for Fuel Tax Credits: Fuel tax credits are primarily used by farmers and associated businesses and should not be abused.
- Frivolous Tax Arguments: Individuals should not attempt to avoid paying their taxes without very good reasons.