5 IRS Scams to Watch Out For This Tax Season
Feb. 2, 2021
Identity theft. Phishing emails. Ghost tax preparers. Phone calls from scammers pretending to be your advocate.
These are all scams that you might encounter during income tax season, according to the IRS.
As Tax Day gets closer, be on the lookout for IRS-related scams. Criminals know that filing taxes can be complicated for consumers and that stressed consumers may be more likely to fall for phishing scams. They know, too, that many taxpayers are happy to pay others to file their taxes for them, often without checking the credentials of these preparers.
It all adds up to the perfect environment for scammers who want to steal your Social Security number and snatch your income-tax refund.
Fortunately, you can avoid these crimes by knowing the signs of an IRS scam.
Here, then, is a look at five of the more common tax-related scams you might encounter during income-tax season.
Scam No. 1. Tax-related identity theft
Due a big tax refund this year? Watch out for thieves who want to steal it.
Tax-related identity theft happens when scammers steal your personal information — including your Social Security number — and file an income tax return in your name. Thieves do this so they can claim your tax return.
How do you know when you’ve been the victim of tax-related identity theft?
There are several clues to look out for:
- You try to file your return online only to have the IRS reject it, saying that a tax return connected to your Social Security number has already been filed.
- You file your taxes by mail. The IRS then sends you a letter stating that a tax return has already been filed with your Social Security number.
- The IRS notifies you that an online account has been created in your name at IRS.gov and you know that you never signed up for such an account.
- The IRS sends you a transcript by mail that you never requested.
What to do next
If you have been the victim of tax-related identity theft, here’s what to do next:
Complete IRS Form 14039, Identity Theft Affidavit. This form allows you to report your suspicions to the IRS. Fill out the form at IRS.gov, print it out, and attach it to your paper tax return. Mail the form and your return to the IRS, following the instructions on the form.
You can also request a copy of your fraudulent tax return from the IRS. For more information about this, visit the IRS’ page on dealing with fraudulent returns.
You should also report this identity theft to the Federal Trade Commission and contact the three national credit bureaus of Experian, Equifax and TransUnion to place a fraud alert on your credit reports.
How to protect yourself from tax-related identity theft:
One of the best ways to avoid this type of fraud is to safeguard your Social Security number and other personal information. Never give personal or financial information to strangers who send you emails requesting this information. Don’t give up this information during phone calls. And be sure to check your bank account and credit card statements regularly for suspicious activity that could be a sign someone has stolen your personal information.
Be sure, too, to take advantage of the IRS’ newest identity protection tool, the Identity Protection Personal Identification Number, better known as an IP PIN. You can apply for this six-digit number directly from the IRS as a way to make life harder for identity thieves. These thieves would need to know not just your name, address, and Social Security number to steal your identity, but also your unique IP PIN.
To register, you'll need to provide your email address, Social Security Number or Individual Tax Identification Number, tax filing status, mailing address, and one financial account number linked to your name.
You will also need to provide a mobile phone number so that the IRS can send you an activation code. If you can't provide this, you will have to wait until the IRS sends you an activation code by mail.
Scam No. 2: Ghost tax preparers
Another common scam this time of year? Ghost tax return preparers.
Hiring an accountant or tax professional to help you prepare your taxes can be a smart move, especially if your returns are complicated. But be careful to make sure you are only working with reputable tax preparers. And never work with what the IRS calls a "ghost" tax return preparer.
Ghost preparers will complete your income tax returns for you. But they won't sign them. That's a no-no. Tax preparers are always supposed to sign federal tax returns. Tax preparers are also supposed to apply for a Preparer Tax Identification Number, better known as a PTIN. Paid preparers must also include this number on any tax returns they prepare.
If your tax preparer prepares your return but won't sign it? That's a warning sign that your preparer might not be reputable. Some ghost preparers charge their clients more money based on the size of these clients' refunds. They might, then, claim fake deductions to increase the size of the refund their clients receive or otherwise fudge the numbers on taxpayers' returns.
How to protect yourself from the ghosts:
Never work with a tax preparer who refuses to sign your tax returns. Look out, too, for preparers who don’t have a PTIN. Before handing your tax information to preparers, ask them if they will sign your returns. If they hesitate? Find another tax professional.
Scam No. 3: Taxpayer Advocate Service scam
The IRS' Taxpayer Advocate Service helps taxpayers tackle tricky tax problems. The service, though, is also at the center of a popular tax-related scam.
In this scam, con artists call taxpayers using a number that looks like it's coming from the IRS Taxpayer Advocate Service office in Houston or Brooklyn, N.Y. Sometimes these calls are made by a human. Other times they are robo-calls that ask taxpayers to return a call.
When taxpayers pick up the phone or call back, a scammer requests their personal information, including the victim's Social Security number or taxpayer identification number. Once scammers have this information, they can use it to steal their victims' identities. They can then open credit card accounts in their name, take out loans in their name, or even access victims' online bank accounts and credit card portals.
How to protect yourself against Taxpayer Advocate scams
The best way to protect yourself? Be wary whenever anyone says they are calling you from the IRS, even if this person is supposedly calling from the Taxpayer Advocate Service. The IRS says that agents from the service don't contact taxpayers randomly. Taxpayers reach out to the service first. Only then do agents from the service contact them.
If someone calls you claiming to be from the IRS? The odds are high it's a scammer. The IRS reaches out to taxpayers through regular mail, not phone calls, texts or email messages. And IRS agents will never call you and ask for your Social Security number or other personal information. If you get such a call? Hang up. You can then call the IRS back to see if there really are any problems with your tax returns.
Scam No. 4: The Electronic Tax Return Reminder scam
The IRS in 2019 first warned taxpayers of a new email scam. In this con, scammers send taxpayers unsolicited emails supposedly from the IRS. The subject lines of the emails vary, but many use either "Automatic Income Tax Reminder" or "Electronic Tax Return Reminder."
The emails contain links to a website that looks like the one run by the IRS. Once taxpayers get here, they are asked to access files that supposedly contain information about their refund, electronic return, or tax account. When taxpayers attempt to access these files, they instead download malicious files to their computer.
The IRS says that this new scam has used dozens of malicious websites posing as IRS.gov. This has made it difficult to shut down. And once criminals infect taxpayers' computers, they might be able to install tracking software onto these victims' devices. Once that software is installed, con artists can track every keystroke victims make. This could eventually lead to these criminals cracking the passwords victims use to log onto their banking, retirement, and credit card accounts.
How to protect yourself
The key to avoiding this scam is to recognize a simple fact: The IRS does not send emails to consumers about tax refunds or sensitive financial information. Instead, the IRS sends regular mail. If you get an email claiming to be from the IRS? Delete it. And never click on links in these emails.
Scam No. 5: The tax transcript email scam
Scammers seemingly never tire of using email messages to trick taxpayers. That's true of the popular tax transcript scam.
In this scam, criminals send taxpayers an email supposedly from the IRS. The email contains an attachment labeled "tax account transcript" or something similar. The email's subject line uses some variation of "tax transcript." Once taxpayers open the emails, they are instructed to open the attachments for information about their tax transcripts.
What happens next isn't surprising. When taxpayers click on the attachment, it infects their devices with malware. Scammers can then use this malware to track victims' keystrokes, crack their passwords, or take over their computers.
How to protect yourself
The advice here is the same: Never open an email supposedly from the IRS. And if you do, never download any attachments or click on any links.
As the IRS says, it will never send unsolicited emails to you. It also will not send sensitive documents such as a tax transcript to consumers. If you get such an email? Delete it immediately.
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