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What to Know About Tax Scams


Tax time is upon us, and taxpayers--both businesses and individuals--need to be wary about a range of scams. Realize that most are preventable. With a bit of knowledge, you can avoid becoming a victim, avoiding fraudulent returns, phony calls and phishing swindles.

Fraudulent returns

The number of fraudulent returns is booming. Thieves use the Social Security numbers of unsuspecting Americans, file bogus tax returns and pocket the resulting tax refunds. But the IRS is stepping up its efforts to combat this scam: An early detection system has enabled the agency over the years to identify thousands of fraudulent returns and block millions of dollars in fake refunds.

Still, the scam is not totally avoidable and you'll never know whether you're a victim until your real tax return is rejected by the IRS because the phony one already was accepted. How can you lower your risk of being a victim? File your tax return early — before a crook can file one.

Develop good habits with your identifying information: Use your Social Security number only when absolutely necessary, check your credit report regularly for suspicious activity and don't throw papers with sensitive information in the trash.

Phony calls from the IRS

One of the most rampant tax scams involves phony calls from IRS agents. These schemes have cost victims more than $23 million over the past few years. There are a few versions of this scam, but in general, the caller will claim to be an IRS agent, saying that you owe tax, like a federal student tax, which doesn't exist, or that you are entitled to a huge refund in order to get you to give the caller more information.

But the swindle is easy to avoid. The IRS will never:

  • Call without first mailing you a bill. For certain, it won't demand immediate payment on the phone.
  • Demand that you pay taxes without an opportunity to appeal or question the amount owed.
  • Require a specific payment method.
  • Ask for a credit/debit card number over the phone.

If you get such a call, hang up immediately and report the scam to the IRS. Even if you do owe tax, hang up and call the IRS at 800-829-1040. The agents there will be happy to help you and you'll know you're talking to the right people.

Phishing and malware

The IRS reported a surge in phishing and malware incidents in recent years. These incidents involve fake emails designed to trick victims into thinking the messages come directly from the IRS, and some look very official, even directing you to a website that's awfully similar to the IRS's official website at www.irs.gov.

Like phone scams, phishing and malware shakedowns are fairly easy to avoid:

  • Remember that the IRS doesn't initiate contact by email, text message or social media. Ever.
  • The official IRS website and any legitimate IRS webpage will begin with IRS.gov. Don't be fooled by variations such as "irsgov" or "irs.net."

Finally, there's an ongoing Form W-2 phishing scam everyone, both employees and employers, should be aware of. The IRS issued warnings about this years ago, but it's still relevant.

If you receive an email claiming to be from the IRS and you weren't expecting one, don't reply, click on any links or open any attachments. You may wish to simply forward the email to phishing@irs.gov before deleting it. And, as always, stay in touch with us; we can help you separate fact from fiction.


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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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