Each year the IRS releases its Dirty Dozen list of tax scams. Though the entire list has 12 scams on it, we want to highlight the three most common that our clients are facing.
Tax fraud through the use of identity theft is often at the top of the IRS’s list. Identity theft occurs when someone uses your personal information, such as your name, Social Security Number or other identifying information, without your permission, to commit fraud or other crimes. In many cases, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.
The IRS has a special section on IRS.gov dedicated to identity theft issues, including YouTube videos, tips for taxpayers and an assistance guide. For victims, the information includes how to contact the IRS Identity Protection Specialized Unit. For other taxpayers, there are tips on how taxpayers can protect themselves against identity theft.
Pervasive Telephone Scams
The IRS has also seen an increase in local phone scams across the country, with callers pretending to be from the IRS in hopes of stealing money or identities from victims. One thing to keep in mind is that the IRS will NEVER call you - they will send you correspondence in the mail.
These phone scams include many variations, ranging from instances from where callers say the victims owe money or are entitled to a huge refund. Some calls can threaten arrest and threaten a driver’s license revocation. Sometimes these calls are paired with follow-up calls from people saying they are from the local police department or the state motor vehicle department.
Characteristics of these scams can include:
Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
Scammers may be able to recite the last four digits of a victim’s Social Security Number.
Scammers “spoof” or imitate the IRS toll-free number on Caller ID to make it appear that it’s the IRS calling.
Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
Victims hear background noise of other calls being conducted to mimic a call site.
After threatening victims with jail time or a driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.
In another variation, one sophisticated phone scam has targeted taxpayers, including recent immigrants, throughout the country. Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting.
If you get a phone call from someone claiming to be from the IRS, here’s what you should do: If you know you owe taxes, or think you might owe taxes, call the IRS at 800-829-1040. The IRS employees at that line can help you with a payment issue – if there really is such an issue.
If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 800-366-4484.
Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.
If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked with the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to firstname.lastname@example.org.
It is important to keep in mind the IRS DOES NOT initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.
7 Tips to Protect Yourself
- File your tax return early in the tax season, before identity thieves do. If you owe taxes, you can still file the return early and then wait to send your payment until April 15.
- Use a secure Internet connection if you file electronically. Don't use unsecure, publicly available Wi-Fi hotspots at places like coffee shops or a hotel lobby.
- If you mail your return, take it directly to the post office. Do not leave it in your mailbox of your employer's outgoing mail slot.
- Shred copies of your tax return, drafts or calculation sheets you no longer nee.
- Get recommendations and research a tax preparer thoroughly before you hand over personal information.
- Know the IRS won't contact you by email, text or social media. If the IRS needs information, it will contact you by mail.
- Respond to all mail from the IRS as soon as possible.