While tax scams are prevalent throughout the year, their frequency picks up steam in the late winter and early spring – the months leading up to tax-filing deadlines. With filing season just around the corner, now is a great time to brush up on the basics of avoiding tax scams.
Here are a few popular varieties of tax scams and tips on how to recognize them.
The term “phishing emails” refers to emails sent by individuals falsely representing their position in order to trick you into providing personal information. Some phishing emails may claim to come directly from the IRS or a similar government entity, while others purport to be from a tax-filing service or software, and some even say they are from your employer or the payroll department in your company. These emails often go to great lengths to look legitimate, from using the logos of the organization they claim to be representing, to having an email address with an official-sounding domain, and even using the name of a CEO or other high-ranking official.
In these emails, you might be asked to provide personal information, such as your full Social Security number, tax filing status, PIN, mother’s maiden name, and the like. You might also be prompted to click on links that mirror the website of the IRS or other entities, while “helping” you to update your records.
Phishing Phone Calls
In this scam, an unknown caller claims to be an IRS employee and provides you with a fake ID number or another counterfeit sign of their credibility. It’s likely they will know a lot of details about you – they might even make their caller ID information appear legitimate. You may be informed that you owe the IRS money and failure to pay up will lead to an arrest, a suspension of your business license, or an audit of your personal finances. In some cases, instead of requesting money, the callers will say you’re owed money instead. In both cases, they will then ask you for personal banking information, telling you that the situation can be remedied through a wire transfer or gift card purchase.
Mysterious Bank Deposits
This relatively novel type of scam has been gaining ground in recent years. One fine day, you wake up and find a sizable new deposit in your bank account. Judging by the info provided to you, it seems like it was placed there by the IRS. This is the modus operandi of the latest set of tax scammers, who use your personal and financial details to submit fraudulent tax returns that can bring in large refunds. The money is electronically transferred to your bank account with the scammers planning to withdraw it later by pretending that they are representatives of the IRS and the money was deposited erroneously.
Since most scams of this type rely on information pilfered from professional tax preparers, be sure to verify that the person or agency you pick to help with your filing takes the necessary security precautions to keep you safe. These should include:
What to Do If You're the Victim of a Tax Scam
If despite all your precautions, you’ve fallen victim to a tax scam and provided your personal information to the wrong person, the first thing you should do is report the scam to law enforcement agencies. You will also have to notify the IRS about the details of the scam. Then, check your bank account to ensure that none of your information has been modified in any way. As a precaution, be sure to change your any passwords associated with your taxes and financial accounts.