There seem to be more and more tax scams that rear their ugly heads each year. The IRS does its best to combat these issues that can result in billions of dollars being stolen from innocent taxpayers. However, the federal tax collection agency cannot mitigate all of these problems. This means taxpayers should be on the lookout for potential tax scams.
Here are 8 tax scams you should know about for 2015, along with tips on reducing your chances of becoming a victim of them:
1. Identity theft
Identity theft is a common scam that happens when the personal information of an innocent victim is stolen and often used to make purchases or file fraudulent tax returns with the IRS. To avoid having your identity stolen, make sure you know exactly whom you are giving your personal information to, including debit and credit card numbers, Social Security Numbers, bank account information, and even your mailing address and phone number. Scammers often need only one of these pieces of information to unlock your personal life and start taking advantage of you.
2. Phone scams
If you receive a suspicious call from an unfamiliar or blocked phone number, be very careful about what information you give out to the person on the other end. If the caller claims to be an IRS agent or anyone looking for money, get contact information for this individual, and offer to call them back. Be very leery of giving out any personal information at all unless you know where exactly it is going. It’s smart to ask for a caller to send you information in the mail to confirm who they are as well.
3. E-mail phishing scams
Some tax scammers try posing as IRS agents or representatives by sending out e-mails from an address that looks official. It may have the terms “irs,” “government,” or “.gov” in the e-mail address itself, the subject line, or the body of a message. Do not reply to any messages asking for personal information. The IRS never communicates with taxpayers via e-mail, so there is practically no way any such e-mails are valid.
4. Promises of “free money” from inflated tax refunds
Some fraudsters claim that they are giving out “free money” or say that they can get inflated tax refunds for their clients. These are probably scams. Many taxpayers do not receive a tax refund from the IRS when they file with Uncle Sam, and most only receive a few thousand dollars at most. So if someone is telling you that you’ll be getting a refund check for big bucks in the mail, there is a good chance you won’t.
5. Tax preparer fraud and scams
Scammers occasionally represent themselves as legitimate tax preparers. They then try to get others to have them prepare and file their taxes. It’s critical to know that whoever is preparing your taxes is licensed, certified, or is associated with a reputable preparer company or accounting firm.
6. Storing income in a bank account based offshore
If someone attempts to persuade you into putting money in an offshore bank account, don’t do it. Even if someone will not reap any benefits from your income, it is still a potentially harmful decision for you. IRS agents make it a point to look out for any unique aspects of an individual’s tax return, and this type of offshore arrangement could send up a red flag for an audit.
7. Charitable organization impersonation
Fraudsters sometimes try to pose as if they are representing a charitable organization. These posers tend to come out in full force after a natural disaster. They attempt to collect money, personal identification information, or financial records, or they will offer to file a casualty loss claim on behalf of an affected taxpayer. The caveat here is that they are a fraud and have no ability or reason to do any of these things.
8. Misusing trusts
Scammers try persuading people to transfer money or assets into a trust fund to reduce how much taxable income they can report on their return. This practice is illegal, whether someone tries to get you to do it or you do it yourself.
1-800Accountant can assist you with all of your tax-filing needs to ensure you stay compliant and avoid tax scams in 2015 and beyond. To learn more, call 1-800-222-6868 or visit www.1-800Accountant.
Image credit: The image included in this blog post is used with permission via the Creative Commons license through Flickr.