4 Tax Scams to Avoid in 2020
For U.S. residents, the annual April 15 tax filing deadline is fast approaching. Unfortunately, every year around this time, fraudsters attempt to take advantage of people’s understandable anxiety over tax delinquency and refund issues with an array of scams.
The United States Internal Revenue Service (IRS) publishes lists of common scams targeting taxpayers. Here are some of the most important ones — as well as what you can do to stay safe.
The IRS Phone Scam
Scammers call taxpayers and claim to be from the IRS. They tell the victim that they owe taxes or that a tax refund is due to them. The scammer then tries to convince the target to send a payment via wire transfer or gift card, or to disclose personal information in order to get their refund. If the scammer is claiming that taxes are owed, the victim may be threatened with the loss of their driver’s license, arrest, or even deportation. Variants of the scam use Video Relay Services (VRS) to target hearing impaired individuals, while other scammers find people with limited English proficiency and approach them in their native language.
How to stay safe: Hang up. As the IRS says on their own website: “Don’t be fooled. The IRS won’t be calling you out of the blue asking you to verify your personal tax information or aggressively threatening you to make an immediate payment.” Simply put, this is just not how the IRS deals with overdue taxes, audits, refunds, or other issues. Sadly, this scam often targets the most vulnerable: older adults and recent immigrants with limited English skills. If you have a friend, family member, or coworker in one of these groups, be sure to have a word with them this tax season to make them aware of these scams.
Victims receive emails from someone claiming to be from the IRS, purportedly to help them access a refund or handle details of their electronic tax return. According to the IRS, these emails often have subject headings such as “Automatic Income Tax Reminder”, “Electronic Tax Return Reminder”, or something similar. The victim is given a “temporary password” and then prompted to visit a malicious website designed to look like the actual IRS website. The end result can be a malware infection with a keylogger or other malicious software.
How to stay safe: Delete the email and report it. According to the IRS website, “The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information.” If you receive such a communication, you can safely assume it’s a scam. Don’t click on anything in the email; just delete it. If you’re feeling especially civic-minded, you can report the email at firstname.lastname@example.org as a way to help keep your fellow taxpayers safe as well.
The TAS Scam
In this newer version of the old IRS Phone Scam, scammers call their targets claiming to represent the Taxpayer Advocate Service (TAS), an internal division of the IRS designed to assist taxpayers. They may use caller ID spoofing to make it appear as though the call is originating from an actual TAS regional office. Calls may come in the form of automated “robocalls” or from live callers. In either case, the end goal of the scam is the same: Get the victim to give up sensitive information like a Social Security number or an Individual Taxpayer Identification Number (ITIN).
How to stay safe: Understand that while the TAS is a legitimate branch of the IRS, they don’t go around hunting for taxpayers to assist! Unless you’ve first reached out to the TAS for help with something, they have no reason to contact you — so if you receive an unsolicited call from someone claiming to be from the TAS office, you know you’re dealing with fraud. As in the case of the more common IRS phone scam, the best course of action is just to hang up.
Ghost Tax Preparers
Unethical tax preparers pretend to professionally prepare a victim’s tax return, but instead of properly filing the return, they abscond with the preparation fee or even the tax refund! Tax professionals are required by law to sign returns which they’ve prepared with a valid Preparer Tax Identification Number (PTIN). Ghost preparers don’t do this. Instead, they print the return and tell the victim to sign it and mail it to the IRS. In the case of e-filed taxes, they will refuse to digitally sign the return with a PTIN. A ghost preparer who collects a commission as a percentage of the total tax refund may also intentionally misrepresent the victim’s tax liability in order to produce an artificially large refund.
How to stay safe: If your tax preparer won’t sign your tax return as the official preparer, using their PTIN, then don’t sign the tax return yourself or submit it to the IRS. In general, when deciding on a tax preparer, follow the same best practices you would when choosing any new service provider: Look at reviews from past customers, ask to see their credentials if possible, and don’t hesitate to ask lots of questions. Watch for warning signs of consumer fraud such as a tax preparer who wants you to pay in cash or seems reluctant to provide a receipt. If you’ve elected to receive a tax refund via direct deposit, double check the bank routing and account numbers on the return to make sure that the money is actually being directed to your own account, instead of the tax preparer’s.
Be on the lookout for these scams during the 2020 tax season, and be sure to share this information with friends and family — especially if they’re not as aware of security and privacy issues as you are.
To learn more about staying safe this tax season, check out these cybersecurity tips for electronically filing taxes.