Recognizing and Avoiding Tax Scams
Tax season is in full swing, which means many of you are sending payments or receiving tax refunds. It also means scammers are working overtime to steal your hard-earned money. Last year, the Internal Revenue Service identified more than
$9.1 billion in fraud from tax scams. This week, we’re sharing essential tips and resources to help you recognize and avoid
tax scams.
Avoiding Fraudulent Tax Preparers
- Choosing the right preparer is critical to ensuring your return is accurate.
- It’s important to choose wisely, as you are ultimately responsible for your income tax return, regardless of who prepares it. Anyone who is paid to prepare or assist in preparing federal tax returns must sign any return they prepare and include their valid Preparer Tax Identification Number.
- Be wary of “ghost” preparers or those who prepare your return but do not sign it appropriately. This is a major red flag as they may be looking to make a quick profit while leaving you responsible for any mistakes or fraud.
Recognizing Tax Payment Scams
- Scammers frequently impersonate IRS employees, demanding payment for fake tax bills using gift cards, cryptocurrency or wire transfers. They often use intimidation tactics, including threats of arrest or license suspension.
- Stay calm. The IRS will never ask for immediate payment with gift cards or cryptocurrency, demand payment without the opportunity to appeal taxes owed, threaten to bring in police to make arrests for nonpayment or threaten to revoke your driver’s license, business license or immigration status.
- Remember, the IRS only accepts these payment methods.
If you or someone you know has fallen victim to a tax scam, don’t panic or feel embarrassed.
Take these immediate steps to minimize the impact and prevent further losses.
Secure Your Finances
- Protect your finances by immediately contacting your financial institution. Follow the steps outlined at IdentityTheft.gov.
Get an IRS Identity Protection PIN
- An Identity Protection Pin prevents scammers from filing a tax return in your name. Once this PIN is established, set up an IRS tax account to check and manage your tax information.