The “Dirty Dozen” list of Tax Scams for 2017 has been released by the Internal Revenue Service. Inside this list resides some all too common and devastating tax horrors of which to be aware and vigilant. The top 4 most common tax scams are: phishing, phone scams, identity theft and return preparer fraud. Let’s take them one at a time to make sure you have a seamless tax season.
Phishing is a term used to describe a scam that uses fake email addresses and websites specifically designed to steal personal information. We all know emails from the IRS look scary and, worst of all, REAL. Know the facts: The IRS will never send an email teasing big refunds, tax bills or seeking personal information. If you receive an email like this, while you might be tempted to open it, forward it immediately to email@example.com to help the government track down these rats. Then delete it immediately and get it out of your email system without opening it.
Phone scams are phone calls with scammers posing as IRS agents threatening taxpayers with arrest, deportation, and license revocation unless a large sum of “tax” money is paid immediately – over the phone, right then and there. These crooks also use Robo-calls that leave messages instructing you to call back a phone number – and upon doing so, you’ll arrive in the same place; being threatened into paying a fake bill to criminals. Remember, if you do not have a bill in your hand from the IRS with a stated amount due for taxes, you can rely on the fact that the call is a phone scam. Threats regarding arrest or law enforcement action is another sign that the caller is not with the IRS, regardless of the ID number they provide you with or information they feed back to you (which is all fake). Know the facts: The IRS will never ask for a credit card over the phone. If you are on the receiving end of this scam, look up www.FTC.gov and go to the FTC Complaint Assistant link or call 800-366-4484.
Identity theft has been front and center in the news for years. Yet consumers still frequently fall prey to scammers who are working diligently to get a hold of your personal information. These scoundrels use your name and social security numbers to file false returns to obtain refunds. While the government is working to prevent this, it continues to be a significant problem. There are things you can do to prevent this from happening to you. For example, never put personal information on a website that is not secure, use security software, firewalls and anti-virus protections. Encrypt sensitive files such as tax records, and use strong passwords. Make sure you do not click on unknown links or sites that might contain phishing malware.
Return Preparer Fraud
Return preparer fraud. Yes, they exist to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. Choose your preparer carefully by following the following steps:
- Ask if the prepare has an IRS Preparer Tax Identification Number (PTIN)
- Inquire whether the preparer is a Certified Public Accountant, an Enrolled Agent or Attorney
- Check the preparer’s bona fides, use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications on the IRS website
- Check the preparer’s history through the Better Business Bureau for disciplinary action through the appropriate boards (State Board of Accountancy, State Bar Association or through IRS.gov, “Verify Enrolled Agent Status”)
- Ask about fees for preparation. If their compensation is tied to your refund—run like your head is on fire!
- Ask for your returns to be E-filed.
- Never sign a blank return and, for goodness’ sake, review your return before signing, and ask any and all questions. If the preparer is less than enthused about answering, you might want to find another professional.
It is your job to be aware, vigilant and an active participant in your own security and safety. Tax time can be anxiety-ridden and stressful. Don’t let your lack of knowledge or fear lead you into even more danger.