How to Prevent from Being Scammed on Your Tax Return Internet Scambusters #1,155
Tax season is here! It should be a time to focus on filing your returns correctly and not to worry about scams. Unfortunately, every year, many people get tricked by scammers targeting unsuspecting taxpayers.
Knowing the types of income tax return scams, recognizing their warning signs, and understanding what to do if you become a victim can help protect you from losing money and personal information.
Tax Return Scams: How to Recognize and Avoid Them
Tax scams come in various forms, with scammers becoming more innovative in their tactics. These are some of the most common scams related to filing income tax returns:
- Identity Theft – A scammer steals your personal information (e.g., Social Security number) to file a tax return in your name and claim your refund.
- Fake IRS Calls or Emails – Scammers impersonate IRS agents and claim you owe back taxes or fees. They often demand immediate payment by gift cards, wire transfers, or cryptocurrency.
- Tax Preparer Fraud – Some dishonest tax preparers increase tax returns or take refunds for themselves.
- Phishing Scams – Scammers send fake emails or texts that look like they are from the IRS or tax agencies. They try to trick you into giving them your personal information.
- Payment Redirection Scams – Scammers trick you into sending tax payments to fake accounts.
Have Scammers Come Up with New Tactics for Income Tax Return Scams?
Absolutely! Scammers change their tactics quickly to avoid being caught. Some new methods they use include:
- Pandemic Relief Scams – Scammers are taking advantage of tax credits and benefits from the pandemic, like the Employee Retention Credit and stimulus payments. They claim you need to "repay" money you received incorrectly.
- Online Tax Filing Scams – Scammers create fake tax filing websites that look like trusted services. They steal your information when you upload your data.
- Social Media Impersonation – Scammers pose as IRS representatives on platforms like Facebook or Instagram and lure victims with false refund claims.
Though the above methods are not foreign to some, scammers work hard to change up their tactics just enough to lure in their victims.
Who Is Most at Risk of a Tax Return Scam?
Some groups have been targeted more often by tax scammers, including:
- Small Business Owners – Scammers take advantage of the complicated process of filing business taxes to trick small business owners into giving away sensitive information.
- Freelancers – Independent workers often get targeted because they may not have their own accounting team.
- Elderly Individuals – Seniors are frequently targeted through phone scams, as they may be less familiar with online fraud methods.
- Immigrants – Scammers take advantage of people who recently moved to the US by using language differences or their lack of knowledge about US tax systems.
Small business owners, immigrants, and the senior population might not be up to date on the current tax laws and later find that the tax preparer they hired is not a CPA or has any experience to file your tax returns. However, they do have experience scamming people by income tax fraud.
How Do I Know If I Have Been Scammed?
You might be a victim of a tax scam if you experience the following:* You receive a notice from the IRS about a tax return you didn’t file.
- You receive a notice from the IRS about a tax return you didn’t file.
- The IRS notifies you that your refund has already been claimed.
- You notice unauthorized activity in your bank accounts related to tax payments or refunds.
- You may feel pressure to make quick payments, especially using nontraditional methods like gift cards or cryptocurrency.
- Watch out for emails or texts that say they are from the IRS and ask for your personal or financial information. The IRS will never contact people this way.
Red Flags to Alert Me to a Tax Scam
Recognizing suspicious activity is critical to protecting yourself. Watch for these red flags:
- Be wary of unsolicited calls or emails claiming to be from the IRS.
- Watch out for requests for immediate payment methods, such as prepaid debit cards or wire transfers.
- Promises of unusually large refunds or exaggerated claims on tax benefits.
- Emails or messages containing poor grammar or spelling are often sent from generic email addresses.
- Fake websites that don’t display secure HTTPS encryption or contain suspicious domain names.
It is important to remember a scammer will use fear and urgency to get you to reveal your personal information. Their tactics are most always “frantic.”
If a scammer files a tax return using your information, you may get a letter from the IRS saying your return has already been submitted. This is called tax-related identity theft. It can delay your legitimate refund and may cause the IRS to review your account further.
What to Do If Someone Fraudulently Filed a Tax Return in Your Name
If you think there is fraud in your tax account, here’s what to do:
- Contact the IRS Immediately by calling their IRS Identity Protection Specialized Unit hotline at 1-800-908-4490.
- File an Identity Theft Affidavit (Form 14039) to notify the IRS about the suspicious activity.
- Report the fraud to the Federal Trade Commission (FTC).
- Monitor your credit report through services like Experian, Equifax, or TransUnion, to flag other unauthorized activity. Request your credit to be frozen to prevent scammers from opening additional accounts in your name, and place a “freeze” on your account.
- Place a Fraud Alert on your credit file and contact any financial institution you use, to protect your financial accounts.
- File a police report if financial theft or significant identity fraud has occurred.
- Retain documentation of all the steps you’ve taken to recover from the scam, including IRS and other organization resources.
Conclusion
If you think you might be a scam victim, remember you are not alone; help and resources are available to protect your financial safety. It is essential to safeguard your identity during tax season, not just a good idea. Check out the articles below to educate yourself and others to avoid falling for income tax return scams.
- FBI: Common Frauds and Scams
- United States Postal Inspection Service: Fraudulent Tax Returns and Scams
Income tax scams are a big problem, but you can protect yourself by staying informed and recognizing warning signs. Be careful, keep your personal information safe, and always verify if a message claiming to be from the IRS is real.
Stay Vigilant and File Safely!
That's it for today -- we hope you enjoy your week.