Avoid The Most Common Tax Scams – A Successful Tax Season Depends On It
According to the Internal Revenue Service, approximately 150 million Americans file their taxes every year. While this may sound like an impressive figure, the IRS also confirms that the American economy ends up losing over $1.8 billion to con artists and scammers every filing season.
These thieves have a plethora of tricks in their arsenal. However, staying aware and vigilant could help you steer clear of losses this tax season and keep your money safe online.
How To Stay Safe During This Tax Season
To help you safeguard your interests and hard-earned money, carefully examine a list of 4 of the most common tax scams. Here is everything you need to know to identify and stop them.
IRS Phone Scam
This is perhaps the most common and the oldest of all money-related cons in the US. The scammer poses as a representative of the Internal Revenue Service and calls you asking for instant payment. They use coercive threats and intimidation techniques to manipulate you into thinking that if you don’t pay them right away, you may end up in legal trouble.
What makes their act so convincing is that most of the times these scammers have access to a phone number that matches the IRS’ helpline closely. The loss due to such fraud calls has been calculated up to a total of $72 million annually.
How to stay safe: No IRS officer will ever make a phone call demanding payment. Also, the government would never ask for payments through a wire transfer or gift cards. If the person claiming to be an IRS officer is abusive or threatening, that is a clear tell-tale sign you are dealing with a con artist. The IRS or any other substitute government body has a set of procedures to conduct tax collection, and a hasty or aggressive phone call isn’t part of the protocol.
Fake Tax Form Scams
An extension of the IRS phone con, the scammer would request your personal information along with your Social Security number (SSN). They claim that this data will be used to fill a fake tax form. These criminals can later use your data for illegal activities. Nearly 147 million people’s private data was leaked through Equifax in 2017, which is testament to the lurking danger.
Additionally, a mutation of these cons has emerged which is known as the Refund Bait-and-Switch Scam. Here, scammers will use your personal information to file a false tax return. When the return credits into your account, they will later call you to make a penalty-payment for an ‘illegally obtained fund’ reflecting in your account. The scammer will pretend to be an agent of the IRS and ask for the money to be delivered to a place or deposited into an account.
How to be safe: Never give your sensitive information away, especially to someone who calls you first. Ask for the person’s credentials before entertaining their requests. You should directly make a phone call to the IRS department in case you receive an ultimatum. You should also beware that the IRS would never raise sudden notices without fair warnings. Even if there is a case of account inconsistencies, the IRS would first send out formal letters for a regular amount of time. If all those letters go unanswered, you may be summoned to a local branch.
Social Security Number Scam
You may receive a call regarding your Social Security number. The caller would warn that your Social Security number will be frozen immediately, unless you pay your pending taxes right away. The common identifying sign of a scammer is they are always rushing you into payment. The government doesn’t just randomly cancel or suspend your SSN. Even if the person calling you has your details, be assured that these callers want to dupe you.
How to be safe: The government will not unnecessarily cancel or freeze your SSN. So, if the call is regarding an unexpected legal action, hang up; it’s most likely a fraud call.
You should also immediately report the incident to the police or the government.
Tax Phishing Scam
These sophisticated scams have come a long way from sending out fear-inducing mails to directly reaching out over social media. These messages look authentic and replicate the formal tone used by government offices. They may push you towards giving your credit card details or sensitive information.
How to be safe: Beware! No government department, including the IRS will ever text you asking for personal details. They will definitely not reach out to you through social media. Therefore, any text asking for the same should raise red flags in your mind.
Even though the text messages and calls look authentic, they are not. You should always be cautious of any unprecedented money that shows up in your account. If you find an unverifiable or unexpected transaction reflecting in your account, it is best to contact your accountant or local tax body.
If government authorities decide to take action, there are legal procedures in place designed to protect taxpayer rights. Their channels of reaching out may be the same as that of a criminal seeking your funds or access to your personal details. They may call or mail you regarding the discrepancies.
However, under no circumstance, does the government request confidential details over the phone, nor will they demand impromptu action. You may be called for a visit to the nearest IRS branch to act upon it, but the authenticity of the address can easily be verified by calling the national helpline for IRS.