It’s not just death and taxes that are inevitable anymore. Now, along with tax season comes the inevitable rise in tax scams attempting to defraud people.
Unfortunately, tax scams (and scams of all varieties) continue to multiply for one simple reason: because they work.
Tax and similar scams primarily use methods of fear and intimidation, along with a lack of information by the victim that leaves them unsure or fearful. They also count on the fact that we are more likely to follow orders when given to us by someone in a position of authority, i.e. a police officer, a doctor, the head of the company, or an IRS agent. It’s this principle of “obedience to authority” that gives criminals the upper hand when attempting to scam others, and it costs Americans millions of dollars each year.
While we would all like to think this will never happen to us, smart, trusting people get tricked all the time. The best defense against tax scams (or any scam) comes from staying informed, not trusting unknown sources, and recognizing when you are being put in a situation that is creating both a false sense of urgency and a state of anxiety or fear.
Take for example this text message received by one of our staff members just this week. In our on-the-go culture, it would have been super easy to give in to the fear that this text created and then go ahead and click that link – just to be sure everything was okay. Fortunately our team member knew better, but it’s pretty easy to see how someone with less information on these types of tactics would be tempted to click through and see what it was all about.
Tax Scams: Here Are Two To Look Out for
There are 2 tax scams in particular that were most common this year, and that are starting to circulate once more now that tax season is right around the corner.
While these may be adapted to utilize new messages, mediums (text, social media) or tactics, it is important to remember that generally speaking, the IRS does not contact taxpayers by phone or email with requests for personal or financial information. If you have a tax debt, official communication will come in the mail and you will be notified of your rights to review or appeal. Any other form of communication – even if it looks legitimate – is likely a scam and should be disregarded and/or reported.
Tax Preparer Phishing Scams:
The tax preparer tax scam is a fake email that is targeting tax preparers. The email requests that the tax professional update their IRS e-services portal information and their Electronic Filing Identification Numbers (EFINs). The email of course includes links to be able to comply with both requests. But instead of being legitimate links they are actually a phishing scheme created to capture the tax preparer’s username and password.
Emails may appear to be directly from the IRS or a closely linked organization such as the Electronic Federal Tax Payment System.
If you receive this type of email, do not click on the links provided. Report the email by sending it to email@example.com.
The IRS warns tax preparers not to click on strange or unexpected emails or links that are seeking to update your tax information.
IRS-Impersonation Telephone Tax Scams:
The IRS impersonation telephone scam is an aggressive and sophisticated tax scam that often targets immigrants or senior citizens – though everyone should be aware of it.
What happens here is that the caller impersonates an IRS employee – and does it very well. They will sound very official, provide a badge number, and will probably even appear to be calling from an IRS office if you check the caller ID. If you get one of these calls, they will already know a lot about you, including possibly your social security number, among other data.
The purpose of the call is to tell you that you owe the IRS money and that it must be paid quickly using either a pre-loaded debit card or by wire transfer. Refusal to cooperate is usually met with a threat of some kind, including arrest, lawsuit, deportation, or suspension of your license. The caller may become insulting and hostile.
In other cases, the script is flipped and the caller is actually calling to let you know that you have a refund coming to you, but only after you share specific personal or financial information. This falls under the category of “too good to be true”, and is something that you need to verify independently directly with the IRS to determine if it’s true. Because more than likely, it is not.
These scammers may even leave you an urgent voice mail imploring you to contact them back immediately regarding either a tax debt or a tax refund.
If you receive a suspicious call about your taxes, do not verify any information that they might provide to you – chances are good that they might have somehow secured personal information such as your Social Security #, but don’t be thrown by this. And certainly do not voluntarily provide them with any personal information. Simply hang up the call and do not push any buttons or request to be transferred to another department.
Once you have ended the call, make note of any details you can, such as the phone number on your Caller ID, the name of the caller, a badge # they provide or any other details you recall.
Finally – Report the call! You can call the IRS directly at 800-829-1040 or visit the IRS website at www.irs.gov.
Again, the key to avoiding this type of trap is information. You have certain rights when it comes to your taxes, and the IRS has specific, approved processes in place when it comes to attempting to collect on a tax debt.
Here is what the IRS wants you to know:
- The IRS will NEVER call you to demand an immediate payment
- The IRS will NEVER contact you by phone without having first issued an official letter that includes your tax bill and information about your rights as a taxpayer
- The IRS will ALWAYS provide you with the opportunity to question or appeal the amount of tax they say you owe
- The IRS will NEVER mandate that you pay a tax debt in a specific way such as with a pre-paid debit card or a wire transfer
- The IRS will NEVER ask for credit or debit card numbers over the phone
- The IRS will NEVER threaten you with arrest by local law enforcement or federal agents for not paying your taxes
- The IRS will NEVER initiate taxpayer communications through email. Unsolicited emails appearing to be from the IRS are phishing scams and should be reported at firstname.lastname@example.org.
As with all tax scams and other social engineering tactics, the best advice is constant vigilance. If something sounds too good to be true it is, and if someone you don’t know (and shouldn’t trust) is attempting to create a heightened sense of urgency around your need to take action, stop and verify it.
Most scams are successful because the victim reacts quickly out of fear and clicks the link or provides their credit card number or other personal information in that emotional state. Which is what the criminals are counting on. By taking the time to verify a claim or independently verify something, you will be able to make a fully informed decision on how to proceed, and avoid falling victim to a scam.