Tax scams can occur at any time throughout the year, but are most active from now through April 15. The IRS identified and confirmed roughly 171,000 fraudulent returns in the early months of 2016, stopping an estimated $1.1 billion in fraudulent tax refunds.
Dodge a potential surprise attack by an identity thief or scammer by understanding how tax fraud schemes work and how you can help defend yourself against them.
The most common scams are:
Identity Theft – The unauthorized use of a Social Security number to file a tax return and claim a phony refund remains the leading scam plaguing taxpayers.
Taxpayers’ personal information is often vulnerable. What’s not available on the Web may be bought on the black market, such as bank account information and Social Security numbers. And what can’t be bought, can be easily picked out of garbage and recycling bins on the curb.
- Phone Scams (Vishing) – Scammers pretending to be IRS agents call taxpayers demanding payment for taxes they claim are owed. They often threaten fines, arrest or garnishing of wages if you fail to cooperate. They may use official-sounding titles and sprinkle in some of your personal information, which is easily harvested from the Internet.
- Email (Phishing) and Text Messaging – Like the phone calls, scammers pretend to be IRS agents via email or text messages. Caution! Emails also may contain malware to infect your computer by capturing keystrokes and accessing personal files on the device.
- Fake Charities – Phony charities exist, often cropping up following a major natural disaster. Taxpayers should visit the Exempt Organizations Select Check on the IRS website or GuideStar.org to ensure a charity is legitimate and qualifies for deductible contributions. Taxpayers are legally responsible for the accuracy of their returns.
- Tax Preparer fraud – Dishonest tax preparers can take advantage of you through refund fraud and identity theft. Victims often are lured by the promise of large, unrealistic refunds.
Defend against tax fraud with the following tips:
- File early! The IRS will reject any duplicate returns filed under a Social Security number. Submit your legitimate tax return and secure a refund before an identity thief files a fraudulent one with your Social Security number.
- Do not use public Wi-Fi when filing your tax returns. As a general rule, avoid using public Wi-Fi networks when conducting any business that involves your finances and personal information.
- Beware of calls and emails: The IRS will first contact you in writing via postal mail regarding any tax information. Do not take phone calls from unknown phone numbers, open email attachments or click on email links claiming to be from the IRS.
- Do Not Release Personal Information: Ask questions before turning over bank account or credit card information. The IRS does not ask for PINs, passwords or confidential access information for credit cards or bank accounts over the phone or email.
- Find an Expert: Find a qualified and vetted tax preparer before you hand over financial documents and personal information. Also ask what steps the preparer takes to protect and secure your files from unauthorized access.
To stay up-to-date with latest scams, visit irs.gov. Report IRS imposter scams to the FTC at ftc.gov/complaint.