As tax season rolls around, stay alert and informed about potential scams out there. The IRS and FTC have raised the alarm, warning everyone to keep an eye out for tax fraud attempts during this busy and often overwhelming time. Here’s what you should look out for:
Phony tax refunds: One common scam involves criminals stealing your identity to file a fake tax return in your name. They’ll arrange for the refund to go directly into your bank account. Then, posing as IRS officials, they’ll contact you claiming that the refund was a mistake and needs to be returned. They might even threaten you with legal actions like arrest or blacklisting your Social Security number. If you follow their instructions, not only do you send money straight into their hands, but you also create problems when trying to file your actual return.
Untrustworthy tax preparers: Beware of “ghost preparers” who complete your tax return but fail to sign it, leaving you responsible for any discrepancies or fraud. They might invent deductions or exaggerate credits just to inflate refunds and charge higher fees.
Identity theft schemes: Scammers use the allure of quick online tax prep to trick people into sharing personal data. When you fill out details on a fraudulent "tax prep" website, you’re handing over all your sensitive information to crooks who can then wreak havoc on your finances and credit.
Fake offers to set up IRS accounts: The IRS Online Account is legit, but scammers love to take advantage of its popularity by offering "assistance" in setting it up. They pretend to be IRS agents or tax preparers looking for easy marks. They’ll ask for your Social Security number, birthdate, or bank details, which they can use for filing fraudulent returns or stealing identities.
Impersonating tax collectors: Some scammers pretend they’re IRS agents calling to collect back taxes. They’ll demand immediate payment, threatening arrest or other penalties like freezing bank accounts if you don’t comply.
Fighting tax-time fraud
Protect yourself from these scams with the following precautions:
- Know the IRS will only reach out to you by snail mail, and never by phone.
- File early in the tax season.
- Only e-file using a secure internet connection.
- When using an online tax preparation service, look for the required tax-preparer identification number on the web page. If you can’t find it, immediately log off. Check the URL of any tax prep site for an “https.” Look for that “s” on every subsequent page you visit on the site.
- If you use a personal tax preparer, ask about their data security practices.
- Respond to all mail inquiries from the IRS as quickly as possible.
If you’ve been scammed
If you suspect that you’ve received an illegitimate “tax refund,” contact the IRS and ask how you can return your refund. Depending on the extent of the scam, you may also need to file an Identity Theft Affidavit.
Next, visit report the scam to the FTC at IdentityTheft.gov or ftc.gov/complaint. They want to catch the crooks as badly as you do! You can also visit Golden 1’s fraud recovery action page for more resources and our Identity Theft Victim Kit.
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Visit Golden 1’s Tax Information Hub for tax tips and resources.
