how to spot a tax scam

Tax season can be stressful, complicated, and confusing. With all the confusion around it, scammers love to take advantage of tax season.


Scammers Love Tax Scams

There are a lot of scams, but few are as effective as tax scams. Scammers know that people will do just about anything to avoid getting in trouble with the IRS – including returning a threatening phone message or sending them money or gift cards.

With most tax scams, criminals are looking for personal information, money, or both. Here are some common tax related scams to watch out for.

Tax Related Identity Theft

First, watch out for tax-related identity theft. The FBI’s Internet Crime Complaint Center recently saw an increase in people receiving fraudulent tax forms because their personal information was used to set up E-Commerce business accounts. So they’re getting tax forms in the mail saying they have taxable income for money they didn’t earn. You might also be a victim of identity theft if you get an unexpected notification that an online account has been created in your name at IRS.gov, or if your notified that someone accessed your existing account.

You might also be a victim of identity theft if you try to file a return and the IRS says a tax return connected to your social security number has already been filed. Really, any unexpected notifications from the IRS could be a sign of identity theft.

What to do about Tax Related ID Theft

The IRS recommends you contact them immediately at 800-908-4490, and complete an IRS Form 14039, an identity theft affidavit. Then visit identitytheft.gov and fill out a report. To avoid identity theft related to taxes, register for an identity protection pin and be sure to protect your social security number and other personal information. Never give it to anyone, unless you’re sure of their identity and how it’ll be saved.

Tax Scam Phone Calls

To steal your personal information for the identity theft scam, criminals will often use one of two popular techniques – and both usually involve phone calls.

First, you might receive a call or message from a criminal posing as taxpayer advocacy service. They might sound friendly and offer to help with tricky tax problems. Unfortunately, it’s often a trick to get you to share your personal information with them. Be suspicious of anyone that has called you – and during the conversation – asks for your personal information. Be careful – they might use it to file a fake tax return in your name.

Threatening Phone Calls

The next technique criminals often use to get your personal information is by calling and threating legal or criminal charges against you, claiming that you owe taxes or might be subject to a tax penalty. They might even share information about you that they’ve found on social media, so beware of oversharing personal information on social media. They will try to intimidate you into giving them personal information and will often demand payment to avoid some scary consequences. One huge tip off is if they demand to be paid via gift cards. Criminals love gift cards, because they can be used quickly, and are harder to trace. Know that the IRS never accepts gift cards as payment, and if gift cards are mentioned, hang up, it’s a scammer. Because people are picking up on this scam, criminals are also sending scared victims to fake – but official looking – websites to input their personal information and to pay via a credit card. The IRS will never call you about payments or penalties. Be suspicious of anyone who calls and demands that you pay immediately.

The IRS Owes You Money Scam

A similar scam is when someone calls and says you’ve paid too much. It’s usually a phone call or a phishing email that tells you the IRS owes you money, you just need to provide your personal information along with your credit card or bank account numbers. Once the scammers have this information, they’ll use it to steal your money, make fraudulent charges, or worse, open up new accounts or get loans in your name. Know that if the IRS did make a mistake, they will contact you through postal mail, not email or a phone call. If you think you might be owed money, call the IRS’s customer service numbers.

There now apps and other tools you can use to help secure your phone, and they will even help you identify scam and spam phone calls.

Stimulus Payment Scams

Scammers are also taking advantage of the stimulus payments mailed to taxpayers because of the pandemic. If you get an email or phone call telling you that you’re owed a stimulus payment, don’t provide any personal information – it’s probably a scam. At this time, there are no new stimulus payments going out. Again, call the IRS’s direct customer service number if you have questions.

When someone contacts you about anything related to your taxes, your money or your personal information, be cautious – especially during tax season.

Share this information with friends and relatives to help them avoid becoming a victim.

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