Tax season is rarely someone’s favorite time of the year. This is when you need to add up expenses. You also need to review the receipts you’ve gathered for the past 12 months. Then, you must check what tax deductions you qualify for.
Are you filing as a single or a married couple? Do you have children or other dependents? All these details are essential. They can help you save money on taxes. But the work is time-consuming. It can also feel overwhelming. So, there are experts who can help. Legitimate companies offer tax filing assistance. They can even file your taxes for you.
However, there are also fake ones or impersonators among these genuine firms. Tax-themed scams often start with an email from someone offering to help you file your taxes. Alternatively, they also center on IRS impersonation. Learn what the most common tax-themed scams are. This way, you’ll know what to avoid the next tax season.
IRS Impersonation Scams
In recent years, IRS impersonation scams have risen. Taxpayers are often targeted by ill-intentioned individuals who try to get hold of their data. There are generally three types of categories more exposed to these scams
- People who need help filing taxes and know little about the process.
- Foreign citizens whose mother tongue is not English.
- People who are filing their taxes for the first time.
These categories might make an easier prey due to their lack of tax-related knowledge. If you fall into one of these groups, be vigilant. Get informed and learn how to recognize tax scams. In essence, IRS tax scams are impersonation scams. Hence, someone will contact you pretending to be from the IRS. Scammers usually use unconventional communication methods. So, instead of using the registered mail service (IRS’s communication channel), they will
- Call
- Text
- Send emails
Contact you on social media
This is the first red flag to spot. The IRS will never text you. Then, check the message carefully. It might require you to provide personal information for verification purposes. The IRS doesn’t do this. It already has access to the taxpayer information it needs.
Moreover, be wary of an unprofessional or downright threatening tone. The IRS doesn’t threaten people with imprisonment or fines over the phone. But scammers can do this to convince you to send them money. Alternatively, they can try to steal your data. Details such as your SSN or bank account are invaluable. Scammers can use them for fraud or identity theft. Never share this information with anyone you don’t know.
IRS impersonation scams often have a sense of emergency. Con artists won’t give you a chance to ask questions. They won’t explain why you owe money or need to provide information. Don’t let them fool you with an IRS number. Scammers can fake caller ID numbers. So, the number might appear as if it belongs to the IRS. Hang up and then call the IRS for clarifications.
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Other Tax-Related Scams
Here are a few other frequent tax-related scams to be wary of.
Identity Theft Scams
The most common tax scams are phishing attempts. These can take different forms. Sometimes, you don’t need to interact with the scammer. You can receive a tax-related email. For example, one that includes a link to an IRS page. There, you should theoretically file your taxes or learn more about tax benefits.
However, this doesn’t happen when you click the link. Instead, you download some sort of spyware or malware. This can access your files and sensitive data without your knowledge. Once scammers get your SSN and other personal details, they’re gone. They can use this data to steal your tax refund. Avoid clicking on suspicious emails.
How can you avoid email phishing scams? Compare the link to the official institution’s URL. Also, use an antivirus across your devices to block cyber threats.
Fake Tax Professionals
Scammers don’t need to impersonate the IRS. Sometimes, they pretend to be financial advisers or tax professionals. They offer tax support in exchange for a fee. The fee is often a red flag. If it’s way below the market average, be skeptical. Compare the tariff with that of other companies. Also, ask the tax expert to provide their credentials. Look them up online to find their profile and license registration number. Fake tax experts are usually after your money. Once you pay the service fee, they are gone. They will ask for it in advance.
Offshore Account Tax Scams
Some scammers might target you with a luring claim. They will promise to help you avoid taxes. How? By helping you open offshore accounts. These sound like the type of matters reserved for the rich. And they often are. High-worth people often own offshore accounts. Many have hidden their wealth from the IRS this way. However, if someone promises help with this, it’s not recommended to follow their advice.
On the one hand, you would be committing a crime. Not disclosing all your assets to avoid taxes is illegal. On the other, you don’t know if you can trust those individuals. They might ask for access to your bank account. They will promise to transfer your funds offshore safely. However, after taking your money, they will vanish.
Conclusion
There are many tax-related scams these days. To avoid them, try to spot the red flags. Don’t share your personal information with tax experts you haven’t signed a contract with. And don’t pay attention to IRS texts, calls, or emails, especially threatening ones. The IRS will only contact you by mail.
Courtesy by Diamond Shield Management
