The 2020 tax season is just gearing up and the scams are already in full swing.
Every year it never fails, technology-savvy nefarious criminals go to work to defraud the hard-working community out of their well-earned money. Their tactics range from the old school to the truly innovative.
Here are four red flags to watch out for:
- Your Social Security Number will be canceled or suspended.
This is a very common scam. Here’s how it works. A recorded message states that your social security number will be canceled or suspended if you don’t pay overdue taxes. They may even have the last-4 of your social. Don’t be fooled. This is a scammer trying to frighten you into returning their call. Hang up immediately and report the phone number to the IRS.
- Multiple Returns
It is surprisingly easy for someone to file a fake tax return once they have your personal information. Scammers can file a return and direct the refund into their account.
Sometime the refund may be deposited into your account. If this happens, a criminal may contact you demanding the money returned or transferred into another account. Don’t give the money over to a criminal and don’t go on a shopping spree. Report it to the IRS. They will want their money back.
- Text or Email Your Information to the IRS
Don’t do it. Recently, a rash of fake emails went out warning recipients of potential IRS phishing attempts. These emails requested the recipient send their personal information, in the name of “security”. The boldness of criminals is always surprising. Never share personal information over email and be wary of IRS communications over email, text or social media. The IRS will never use these forms of communication to request personal or financial information. If the IRS wants something from you, they will mail you a letter. It is always best to confirm any information received or requested through an official IRS phone number or website.
- Ghost Tax Preparers
These are unethical tax-prep posers who charge clients a fee for preparing or filing tax returns only to leave them with unfiled taxes and no refund. These criminals are looking to benefit by charging you a fee or percentage of the refund upfront and in cash. Here’s how to tell the difference between a ghost and an official tax preparer. The IRS requires any paid Tax Preparer to have a valid Preparer Tax Identification Number or PTIN. The preparer must also sign and include their PTIN on the filed return.
The accounting industry is a favorite target for cybercriminals. In 2017, The Equifax data breach exposed customer data, including Social Security numbers, dates of birth, home addresses, credit card numbers, and driver’s license numbers. In May 2019, an attack on the accounting software provider, Wolters Kluwer took down their web-based software services for days, affecting accounting firms worldwide, including many small to mid-size accountants in the United States. The information collected in these kinds of data breaches is like a goldmine for criminals wanting to exploit honest and hardworking people.
So how do you tell the difference between an IRS professional and a scammer? Scammers will often use threats and intimidation to convince you to turn over money. Scammers may use pressure and urgent deadlines to force you to make hurried decisions without considering ramifications or proper procedures. Remember, the IRS will not accept gift card numbers, prepaid credit cards or wire transfers as payment for taxes owed. Your Social Security number will not be canceled or suspended because you owe taxes. A legal tax preparer is recognized by the IRS with an official PTIN. The IRS will not threaten to bring local law enforcement, immigration, or take any action without giving you the ability to question or appeal the amount owed. The IRS cannot revoke your driver’s license, business license, or immigration status. Do not fall prey to intimidation. If this happens to you, contact the IRS directly using an official government number or website. Do not return calls or emails from scammers.
The IRS has a dedicated reporting email for phishing scams. If you are the recipient of a malicious phishing attack, forward the email to firstname.lastname@example.org. The IRS also has a dedicated Tax Scam and Consumer Alert website, https://www.irs.gov/newsroom/tax-scams-consumer-alerts
If you believe you're a victim of tax fraud, file a complaint with the FTC; request that the major credit bureaus put a "fraud alert" on your record, and contact the IRS at 1-800-908-4490.