4 Top Tax Scams to Avoid

Alden Wicker
Posted

Phishing

As with other forms of phishing, a would-be scammer will pose as the I.R.S. and contact you by email or lure you to a fake website, and solicit information they can use to steal your money or refund.

The thing is, the I.R.S. does not initiate contact with taxpayers by email—or text, or any social media—to request personal or financial information. That direct Twitter message from the I.R.S. asking you for your S.S.N.? Not legitimate.

How to Prevent It

If you receive an email, tweet, Facebook message or any other electronic communication from the I.R.S. or an organization that is closely linked to the I.R.S., like the Electronic Federal Tax Payment System (EFTPS), don’t give out any personal information. Forward it to phishing@irs.gov.

If This Has Happened to You

If it’s dawned on you that you’ve given your information to a phisher, immediately contact the I.R.S. Identity Protection Specialized Unit at 1-800-908-4490 and file a police report. Then keep a vigilant eye on your credit report and other financials for any suspicious activity.

Return Preparer Fraud

Most return preparers are just there to help you navigate tax season. But a few are there to take your money and run. They’ll take part of your refund, charge inflated fees or promise guaranteed or huge refunds. (Depending on your personal tax situation, this is how much a return should cost.) According to the I.R.S., federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against many others.

How to Prevent It

Find a new tax preparer if he or she:

  • Does not sign the return or will not include a Preparer Tax identification Number on it.
  • Does not give you a copy of your tax return.
  • Promises a refund that seems too big to be true.
  • Charges a percentage of the refund amount as preparation fee.
  • Requires you to split the refund to pay the preparation fee.
  • Adds forms to the return you have never filed before and can’t give you a good explanation of what they are. 
  • Encourages you to place false information on your return, such as false income, expenses or credits.

If This Has Happened to You

Turn ‘em in. Complete the Form 14157, Complaint: Tax Return Preparer and mail it to:

Internal Revenue Service
Attn: Return Preparer Office
1122 Town & Country Commons
Chesterfield, MO 63017-8200

Free Money!

If, in your church or another public place, you see a flier advertising free money from the I.R.S. and suggesting that you can file a tax return with little or no documentation, rip it down and tear it into little pieces. Also question any friends or family members who unwittingly promote this to you. This is an increasingly common scam that often targets low-income individuals. (There is a way you can get money from the I.R.S., but you won’t find it on a flier.) By the time your return is rejected, the scammer is long gone with your Social Security number and money.

How to Avoid It

Don’t believe anyone who promises you a abnormally large refund, or tells you you can file your return with almost no documentation.

If This Has Happened to You

Contact the I.R.S. Identity Protection Specialized Unit at 1-800-908-4490. And yes, you’ll still have to file.