Tax season can be stressful enough without the added threat of scams designed to steal your personal information or hard-earned money. Every year, scammers devise new ways to take advantage of taxpayers—whether through phishing emails, fraudulent phone calls, or identity theft schemes. Understanding these scams and learning how to protect yourself is crucial. In this blog post, we’ll explore some of the most common tax scams and provide tips on how to avoid becoming a victim.
1. IRS Impersonation Scams
One of the most prevalent tax-related scams involves fraudsters posing as IRS agents and contacting taxpayers via phone calls, emails, or text messages. They often claim that you owe back taxes and threaten legal action, arrest, or even deportation if you don’t pay immediately. They may demand payment via wire transfer, gift cards, or cryptocurrency—methods the real IRS never uses.
How to Avoid This Scam:
- Know how the IRS operates: The IRS will never demand immediate payment over the phone or threaten arrest. They communicate primarily through mail.
- Verify the claim: If you receive a suspicious call, hang up and contact the IRS directly through their official website or phone number.
- Never share personal information: Scammers may try to get your Social Security number or financial details—never provide these over the phone or email.
2. Phishing Emails and Fake Websites
Scammers often send emails that appear to be from the IRS or a tax preparation service, luring victims into clicking on fraudulent links and entering sensitive information on fake websites. These emails may contain official-looking logos, urgent messages, or promises of tax refunds.
How to Avoid This Scam:
- Be skeptical of unexpected emails: The IRS does not initiate contact via email or text.
- Check the sender’s email address: Scammers often use addresses that resemble legitimate ones but contain slight misspellings.
- Never click on suspicious links: Instead, visit the IRS website directly by typing in its official URL, rather than clicking links within an email.
3. Tax Preparer Fraud
While most tax preparers are legitimate professionals, some take advantage of clients by inflating deductions, falsifying information, or stealing refunds. Others may promise unusually large refunds to entice taxpayers.
How to Avoid This Scam:
- Work with trusted professionals: Research tax preparers before hiring them. Look for credentials such as a CPA, EA, or attorney.
- Avoid preparers who base fees on refund size: This is a red flag indicating potential fraud.
- Review your return before filing: Ensure all information is accurate and legitimate before signing.
4. Social Security Number and Identity Theft
Tax-related identity theft occurs when scammers use your Social Security number to file a fraudulent tax return and claim a refund before you do. Victims often discover the fraud when they try to file their taxes and find that a return has already been submitted under their name.
How to Avoid This Scam:
- File early: The sooner you submit your tax return, the less opportunity scammers have to use your information fraudulently.
- Protect your SSN: Never share your Social Security number unless absolutely necessary, and store physical documents in a secure place.
- Monitor your credit: Regularly check your credit report for any suspicious activity that may indicate identity theft.
5. Fake Charity Scams
During tax season, fraudsters may solicit donations for fake charities, claiming that contributions are tax-deductible. Scammers prey on generous taxpayers, particularly after natural disasters or humanitarian crises.
How to Avoid This Scam:
- Research charities before donating: Check the IRS’s database of tax-exempt organizations to verify legitimacy.
- Avoid giving personal information over the phone: Fraudsters may ask for your Social Security number or bank details under the guise of a donation request.
- Only donate through official websites: Scammers often use fraudulent URLs to mimic legitimate organizations.
Conclusion
Tax scams continue to evolve, but staying informed and taking preventative measures can help protect you from becoming a victim. By knowing how the IRS communicates, safeguarding your personal information, and verifying tax preparers and charities, you can reduce the risk of fraud. If you suspect you’ve encountered a tax scam, report it to the IRS immediately.
Being proactive can save you time, money, and frustration—so stay alert, stay informed, and file your taxes with confidence