Tax season is officially upon us and with it comes the inevitable new wave of tax season identity fraud. Every year, thousands of people lose millions of dollars and their personal information to tax scams during tax season. As taxpayers become more sophisticated at spotting scams, so do the scammers. They use regular mail, telephone and email to scam taxpayers, tax professionals, and even HR and payroll departments through phishing attacks and malware.
One way to recognize whether you are a target of a scam is the mode of communication. The Internal Revenue Service (IRS) will not initiate contact with taxpayers by email, text messages or social medial channels to request personal or financial information. By recognizing this simple fact, you can thwart some of the tax scams that have worked on taxpayers in the past. But because scammers don’t give up that easily, scams seen during the 2018 tax season are more sophisticated and appear to be legitimate.
4 Examples of 2018 Tax Scams
Stolen Refund
Scammers who have stolen your personal financial information will file a fraudulent tax return on your behalf. The scammers will make up numbers to make sure the return they are preparing includes a significant refund. The refund will then be sent to an account which they control. The taxpayer will not know this has occurred until their real return is filed and rejected because a return has already been filed.
Erroneous Refunds
This is a new twist on the stolen refund scam. After the scammers have stolen your personal financial information from tax professionals and/or HR Departments, they will file a fraudulent tax return on your behalf. But, rather than send the tax return refund to an account they control, they will send it to your bank account. Shortly after it has been deposited, the scammers will call you and pretend they are a collection company working for the IRS, which has deposited the funds to your account in error. Then they will demand you send the money to a different account. They will also leave voice messages threatening you with criminal charges if you don’t return the refund.
IRS-Impersonation
Scammers claiming to be IRS employees are calling taxpayers (including recent immigrants) claiming the taxpayer owes money to the IRS and it must be paid promptly through a gift card or wire transfer. Scammers are threatening arrest, deportation and/or suspension of business and driver’s licenses, sometimes using a hostile and insulting tone.
Federal Student Tax
College students can be an easy target for scammers who do not have a long history of filing tax returns. Knowing this, scammers are calling college students demanding payment for a non-existent “Federal Student Tax.” Scammers will threaten to report the student to the police if they do not immediately wire a payment.
Avoiding Tax Scams
Knowledge is power when it comes to tax scams. If you are aware of what the IRS won’t do with respect to collecting tax payments, you’ll be able to easily spot the imposters out there trying to scam you out of your refund.
The IRS Will Never:
- Call to demand immediate payment over the phone
- Call about taxes owed without first sending the taxpayer a bill
- Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe
- Require you to use a specific payment method for your taxes, such as a prepaid debit card
- Ask for credit or debit card numbers over the phone
If you think you’re being scammed, do not give the caller any information and hang up immediately. You can report the call to the Treasury Inspector General for Tax Administration and file a consumer complaint to the Federal Trade Commission. If you think you might actually owe taxes, call the IRS directly (800) 829-1040. While calling the IRS may not be what anyone ever wants to do, making that call could potentially save you thousands of dollars.
Here’s to a scam free 2018 tax season!
