There are thousands of people who have lost millions of dollars as well as their personal information to different tax scams. Scammers use the phone, email, and even regular mail in order to set up businesses and individuals. These scammers even target tax and payroll professionals. When it comes to tax scams it is important to know that the IRS will not initiate contact with a taxpayer by text, email, or social media asking for personal and financial information. Here are some tax scams to watch out for.
Tax Refund Fraud
Over the last few years, scammers have been using people’s social security numbers and filing a false return as those individuals. The scammer will file electronically and claim high deductions with a low income. Then when the individual goes to file their return legitimately, it is rejected as it has already been filed. The best solution for avoiding this scam is to get a PIN for identity protection from the IRS. This PIN will have to be used on the tax return in addition to the social security number as an extra verification of identity.
The phone scam is quite generic and typically a scammer will state that you have a tax bill that you have to pay immediately or you will be arrested. The number will likely come up as IRS on your phone as they use phone spoofing to do this. In addition, the scammer will also likely have the last four digits of the individual to provide further legitimacy. The thief will use a common name and a fake badge number and request payment to be made by prepaid debit card or by wire. The most important thing to know to avoid this scam is that all contact from the IRS is done through snail mail and no one will ever contact you by phone requesting a tax payment.
Who wouldn’t want to get a notice stating the IRS owes them money? In this scam, the crook will email an individual and state that the person is owed a refund. In order to get this refund the individual simply has to send their bank account information and their social security number. If you receive an email such as this, do not send this information. Contact the IRS by phone and tell them about the email.
Another popular scam is done through the mail. In this case, an individual receives a tax bill in the mail that seems legitimate. The letter seems official and may ask for a payment for not having health insurance or state some other discrepancy on the tax return. Since this scam is completed through the mail it can be a bit trickier to realize that it is a scam. The best thing to do is to call the IRS directly to discuss the details of the letter.
Overall, this is just a small list of the many tax scams that are out there. It is important to remain diligent and never give out your personal information over the phone, by email, or through the mail to anyone that you do not know. If you feel like you may have been scammed or have questions about your taxes, you may contact us at any time for help and advice.
Tax Tips for the Self-Employed
How the SECURE Act Impacts Small Business Owners
What You Need to Know About the QBI Deduction
Do You Need to Send Out 1099s?
Checklist for Maintaining Your Limited Liability: Avoiding Piercing the Corporate Veil
Why Small Businesses Need a CPA