3 ways tax scammers are targeting you
Think you can tell a fake IRS notification from a real one?
Don’t be too sure.
Because while it can be easy to think to yourself, “I would never fall for something like that,” tax scammers still fool smart people all the time.
Just ask the 13,500 victims who have fallen for fake IRS phone calls over the last six years alone, losing more than $67 million.[i]
And the most common type of scam victim isn’t necessarily an elderly person.
In fact, AARP recently discovered most scam victims:
Simply put, it doesn’t matter your age or gender – almost anyone can fall for a scam.
Watch out for these three year-round tax scams.
Phishing scams (emails, texts, calls)
A phishing scam works like this: a scammer pretends to be someone else, or, in this case, the IRS itself. To convince you to divulge personal and sensitive information, the scammer attempts to contact you one of three ways:
The email and/or text will look and sound legitimate as if it’s coming from the IRS.
But the IRS does not use an email or a text to initiate correspondence.
If you receive a suspicious email that claims to be from the IRS:
If you receive a suspicious text that claims to be from the IRS:
As for threatening IRS phone calls, receiving one can be unnerving. The caller will most likely claim you owe the government money and even threaten you with jail time if you don’t pay up immediately.
But the IRS will never demand immediate payment, they will never threaten you, and they will never ask for unusual methods of payment (such as a gift cards).
If you receive a suspicious call from someone who claims to be with the IRS:
Unfortunately, phishing scams probably aren’t going away anytime soon. According to the IRS, there was a 60% increase in these types of scams last year.
Tax preparer fraud
Do you realize more than half of American taxpayers use someone else to prepare their return?[ii]
This reliance on a third party provides ample opportunities for scammers to weasel their way into your financial life and steal your personal information.
Certainly, most tax professionals are straight-up, hard-working people. But, just like we encounter in the financial services industry, there are always a few bad apples.
Be suspicious if anyone:
If you work with a tax preparer, be sure they have a Preparer Tax Identification Number (PTIN) and are registered with the IRS.
Tax identity theft
This could be the most damaging of all the scams I’ve mentioned.
Tax identity theft is when a scammer uses your stolen Social Security number to file a fake tax return in your name with the goal of stealing your refund. Unfortunately, you won’t know it’s happened until you try to file your actual tax return and the IRS informs you that you’ve already filed.
And if you think your information isn’t “out there” for scammers and hackers to steal, think again.
According to USAToday, billions of people were impacted by data breaches in 2018. Granted, in some cases, the information stolen is merely an email address.
But it can get worse.
One of the most damaging breaches of all-time came in 2017 when hackers gained access to data held by the credit bureau Equifax: more than 143 million Americans had information (including Social Security numbers) stolen.
I like to tell people this: It’s not a question of “if” your personal information will be stolen. Rather, it’s a question of “when.”
Other signs of tax identity theft include:
One of the best ways to help prevent tax identity theft is to file your taxes as early as possible. This way, if a scammer tries to use your stolen information to file a return, it won’t be accepted.
For all the good things about technology, criminals can easily manipulate it to steal from you.
To reduce your risk of becoming one of their victims this tax season, be highly suspicious and never give out your personal information to anyone who initiates contact.
If you discover you’re a victim of tax identity theft, take action immediately by visiting the IRS’ Identity Theft Victim Assistance webpage.