Tax Terror: How Scammers Take Advantage of Taxpayers

We are going to take a closer look at tax-related scams that cost both individuals and the government billions of dollars every year and try to teach you how to be more on guard.

Tax season brings a lot of mixed emotions: the anticipation of a refund, the stress of gathering documents, and, unfortunately, the ever-present threat of tax scams. Nobody is safe from these cunning criminals who are constantly cooking up new schemes to exploit unsuspecting taxpayers, and you might be their next victim.

The Dirty Tricks: Top Tax Scams to Watch For

Tax scams are like chameleons, and the scammers behind this trickery are always adapting to try and stay one step ahead of their victims. They can sometimes be tricky to spot, but there are a few prominent tactics you need to be on the lookout for:

The Imposter IRS Agent

Scam as old as time, this one is something like a classic in the tax scam world. It involves scammers impersonating IRS agents. They call with threats of arrest or jail time if you don’t pay an imaginary tax debt immediately.

One very important thing you need to remember is that the real IRS will never use scare tactics or demand payment over the phone. These imposters try to scare their victims into believing something terrible will happen unless they take action right away, and this tactic often works on the elderly or people who just started paying taxes and aren’t yet familiar with the ins and outs of the IRS.

The “Surprise” Refund

One of the good parts of tax season, and the one most people look forward to, is the highly expected refund. When the promise of money is involved, a lot of us tend to let our guard down and scammers count on that, which is why tax refund scams are extremely common.

Picture this if you will: an email pops up with the subject line “Tax Refund” and it looks legitimate. The email is well-crafted and contains a link you can click that will lead you to a form you need to fill out and you will get your refund. These types of emails always have scammers behind them because the IRS never emails people asking for their personal and financial information.

Identity Theft Nightmare

If someone knows your name, date of birth, and Social Security number, they could cause a lot of trouble for you. In this context, someone could perform tax identity theft.

How this scam works – Someone submits a tax filing under your name which they can easily do if they have the aforementioned information. Once they file these taxes, the scammer will be able to claim a refund or tax benefits that legally belong to you. And when the time comes for you to file your taxes, you’ll be met with an alert from the IRS that you can’t due to a duplicate SSN.

The reason why this scam works so often is that many people wait as long as possible to file their taxes and scammers who have access to this personal information take advantage of the delay. While it is possible to prove you fell victim to a tax identity theft and reclaim your refund, the process to confirm your identity is long and overly complicated.

The Shady Tax Preparer

Let’s face it, filing taxes can be a hassle for those who don’t know what they’re doing. The process is complicated and the documents confusing, which is why many people seek out help from tax preparers.

 Since these services can be beneficial for those who don’t fully understand the U.S. tax system and are popular among first-time filers, scammers have found a way to exploit them.

These phony tax preparers come to their victims with promises of large refunds and hassle-free tax filing, but nothing is as easy as these scammers claim it is. If you solicit services from a scam tax preparer, they could commit identity theft and steal your refund, all while charging you for their services.

Apart from that, they could also get you into serious legal trouble by inflating your income or claiming fake credit cards or deductions.

W8-BEN For Scam

International and non-resident taxpayers should be familiar with the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting, or more simply the W-8BEN form. This is a real form that scammers use to steal information from unsuspecting foreigners who aren’t too familiar with what an IRS form can or can’t contain.

Scammers will contact potential victims via mail and send them a letter claiming they need to fill out the W-8BEN form and send it back. However, the form they send isn’t legitimate and it asks for information the IRS would never seek out such as passport numbers, credit card information, and pin codes.

If you’re an international taxpayer, it’s important to know that the IRS never sends forms to taxpayers directly.

Final Thoughts

Tax season isn’t just about forms and deadlines – it’s open season for scammers determined to steal your hard-earned money and your identity. These criminals are relentless, costing taxpayers billions each year. Don’t be a victim!

Tax season should be about maximizing your return, not dodging con artists. Remember to always stay vigilant, keep informed, and be careful around tax season. And if you believe you’ve fallen victim to a scam, we’re happy to help.