As tax season approaches, it’s important to be aware of the potential scams associated with filing your IRS tax returns. Every year, thousands of taxpayers fall victim to fraudulent activity related to their taxes and end up losing money or having their identities stolen. Here are some of the most common.
IRS email scam
One common scam is when a taxpayer receives an email from someone claiming to be from the IRS. The emails usually state that there are discrepancies in the taxpayer’s return and request personal information such as Social Security Numbers or banking details. If you receive an email like this, you should call the IRS directly using the number found on its website (not a number included in the email).
Fake IRS agents
Criminals may impersonate IRS agents over the phone and demand immediate payment for back taxes owed by wire transfer or prepaid debit card. You should never pay any bill using prepaid cards – no reputable service would demand payment this way. More importantly, the IRS will send a bill through the mail with appropriate timelines for payment; the only way you would need to pay immediately is if you’ve reached the payment deadline noted in that bill.
Someone filing in your name
This may be one of the worst issues to try to clear up when dealing with the IRS – someone beating you to the punch and filing a return before you can get yours prepared. Criminals will file as soon as the IRS begins accepting returns, using false information in order to receive a refund. They are often able to collect your personal information through phishing emails, data breaches, or other methods of identity theft. To protect yourself against this type of crime, consider signing up for an Identity Protection PIN through the IRS. This six-digit code will prevent someone else from filing a return using your name.
Bogus websites
If you’re searching online for help preparing your returns, beware of websites that look official or those that offer pricing that’s lower than average. Some have the goal of stealing your name and Social Security Number – once you enter that information the site either shuts down or the “next page” button simply freezes. While there are two big players in tax preparation, you can also find suggestions through your state or federal tax websites. You can also ask friends for recommendations of who does their taxes.
Fly-by-night storefront tax preparers
Just like with online sites, you may see pop-up tax preparers on your drive to work or when you’re headed to the gym. I’ve seen places that have a sign out front like a fast-food restaurant, advertising $69 tax returns and of course the largest return possible. The problem here is two-fold. One, you don’t know if you can trust them to keep your information private and to actually know how to maximize your return legally. Two, will they be there if you get audited? Again, look for recommendations you can trust before you believe what you see on a sign out front.
Debt collection
While not connected to your current return, tax season is when scammers posing as debt collection agencies will often contact people claiming they owe back payments to the IRS. They will say they’re working on behalf of the government or that they purchased debt from the IRS. First off, you should know pretty quickly if you have had any payments in question to the IRS. But also know your rights when a debt collection company calls for any reason and investigate thoroughly before you even offer to pay.
Unfortunately, it seems that scams are invading every part of our lives. Tax returns are no exception. Make sure to keep your personal information as secure as possible, be wary of any too-good-to-be-true claims you hear, and consider signing up for the IRS Identity Protection Pin. Also, don’t dawdle when filing; the IRS officially started accepting returns on January 23, 2023. Try to get your return in as soon as possible.
Note: As I was preparing this blog to publish, I saw an article that stated the IRS recommends taxpayers hold off on filing for 2022 if they received a special tax refund from their state. Apparently 19 states offered these refunds, and the IRS hasn’t determined whether they are taxable. If you will delay your filing and don’t have an Identity Protection Pin, this may be the year to sign up. It’s ridiculous the IRS wasn’t ready for this eventuality given many of these state payments were made months ago.