Tax season is in full swing, which means there are documents to gather, deductions to account for, and forms to file. However, one more thing taxpayers, business owners, and financial institutions must be aware of are IRS tax scams in which con artists impersonate the government agency.
Unfortunately, there is no shortage of criminals that seek to separate hard-working individuals with their money. As Tax Day approaches, be on the lookout for these tax scams and know how to avoid them.
Economic Impact Payment Theft
Economic Impact Payments (EIPs) were part of a federal government initiative to support people going through hard times due to layoffs, business closures, and loss of work caused by COVID-19. However, attempted thefts of EIPs started as soon as the IRS sent out this pandemic-related support to individuals.
Any taxpayer who received an EIP in 2020 or 2021 should know the following signs of stimulus check scams:
- Text messages, phone calls, or emails inquiring about bank account numbers
- Email or text requests for stimulus check recipients to click on a link or verify data.
- Communications that state the recipient received an EIP in error and must return the funds or else face fines and other penalties.
- Communications requesting a fee to unlock additional EIP funds.
Remember, the IRS never initiates contact by phone call, text, email, or social media asking for sensitive information like Social Security numbers, bank account or routing numbers, credit card information, or other personal or financial information. Also, there is no fee to gain access to government support funding, including stimulus checks.
Any information related to your stimulus checks will come directly from the official IRS website (https://irs.gov) or through the mail.
Many taxpayers lost their jobs due to the pandemic and received unemployment compensation. Another scam that has increased in regularity is the filing of fraudulent unemployment claims using stolen personal information. Oftentimes, scammers stole the personal information of individuals who hadn’t even filed claims so they wouldn’t notice if a payment went missing.
The IRS urges taxpayers to be on the lookout for a Form 1099-G that reports unemployment that they never received. If you find yourself on the receiving end of such a form, immediately contact the appropriate state agency to report the incorrect information. Check out the IRS’s page on Identity Theft and Unemployment Benefits for more information on what to do if you’ve become a victim of unemployment fraud.
Gift Card Scam
A common IRS impersonation tax scam that’s been around for years is the gift card scam. Here’s how it works.
A scammer calls an unsuspecting taxpayer and claims that they owe federal taxes and are at risk of being charged with criminal activity, which could result in punitive fines or even jail time. The scammer demands that the taxpayer pays a penalty fee by sending a gift card from certain stores or websites. Once the victim purchases the gift cards and calls the scammer back, the scammer asks for the gift card’s number and PIN.
Once the scammer has that information, they use the gift card to buy whatever they want and disappear without a trace, leaving the victim in the hole for whatever amount they spent.
If you receive any phone calls that claim you’ve committed tax fraud or owe taxes, hang up and block the number. The IRS will never call you to request gift cards to pay off penalties or overdue tax bills.
Refund Recalculation Scam
Criminals have also been known to take advantage of taxpayers receiving a refund. In a refund recalculation scam, a scammer will contact a taxpayer to say that the IRS recalculated their refund and actually owes more than they initially thought.
Sounds too good to be true? Well, that’s because it is.
Typically, scammers send this communication via email and include a link. The email asks the recipient to click the link and verify information such as Social Security number, date of birth, driver’s license number, and bank account information — all under the guise of sending the taxpayer the “rest” of their refund.
Scammers will take this information and use it to access online bank accounts, apply for new credit cards, and apply for loans under the taxpayer’s name.
While the IRS does indeed make mistakes, if they miscalculate your refund, they’ll contact you through the mail, not an email. Also, the IRS will never, under any circumstances, ask you to provide personal details through email.
IRS Taxpayer Advocate Impersonation
The IRS Taxpayer Advocate program provides support for individuals and businesses experiencing financial difficulties. Taxpayers are eligible for this service if they’ve tried to solve a problem through normal IRS channels of communication or if they believe that there has been a mistake in an IRS procedure that’s affecting their finances.
Criminals will use phone numbers that closely remember that of the IRS Taxpayer Advocate program and call individuals claiming that they are there to help them resolve a tax issue. The con artists will appear very sympathetic and offer their services, but can only help if they have the victim’s Social Security number or other taxpayer identification number. They’ll attempt to get enough information out of the victim so they can steal their identity.
Be wary of all phone calls that claim to be from the IRS. While the IRS Taxpayer Advocate program is available by phone, they never contact taxpayers randomly. They only respond to individuals and businesses who have reached out first.
Protect Yourself from Common IRS Tax Scams
To reduce your chances of becoming the victim of fraud, we strongly urge taxpayers to do the following:
- Strengthen passwords for tax software, bank accounts, and credit card accounts
- Never, under any circumstances, provide personal or financial information over the phone, via text, or by email
- Never click suspicious links from email accounts claiming to the IRS or any other government agency
- Report scam phone numbers and email addresses by contacting the Treasury Inspector General for Tax Administration or sending the information to firstname.lastname@example.org.
Work with an Accountant to Keep Your Finances Safe
Accountants and other tax professionals are savvy at spotting tax scams and con artists’ ploys. If you’re ever uncertain about a request for personal information, a tax payment, or anything else related to your taxes, work with your accountant at 1-800Accountant. They can help you identify potential scams and ensure that you don’t fall victim to the many criminals attempting to steal money from hard-working taxpayers.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.