We all know the online world is ripe with fraud. But it can be difficult to spot digital crooks and rip-offs in emails and websites. Especially when it comes to tax scams. Sure, every year has its share of tax-related double-crossers, but the scams continue well after tax return deadlines. The IRS has shared some ongoing scams to watch out for even beyond tax season and how to avoid them.
1. Phishing: These are fake emails or websites that impersonate the IRS website in an attempt to steal personal information about you or your possible refund.
How to protect yourself: The IRS ONLY sends official letters though the United States Postal Service. It will NEVER email you or call you for information. not contact you via email.
2. Fake charities: Criminals exploit the fear and uncertainty surrounding the pandemic to set up bogus charities that rob innocent victims who believe they're helping those in need. The "charity" may even claim to be working on behalf of the IRS to help virus victims get their tax refunds.
How to protect yourself: Charities with familiar-sounding names and aggressive marketing are often bogus charities trying to make donors believe they represent the actual, well-known organization. They'll also refuse to provide an Employer Identification Number (EIN) when asked and will not have positive reviews on sites like Charity.org. You can search for legitimate charities using the IRS Charity Search tool.
3. Threatening impersonator phone calls: An alleged IRS agent threatens you with arrest, deportation, or license revocation if taxes are not paid immediately by prepaid gift card or wire transfer.
How to protect yourself: The IRS will never threaten you or demand immediate payment over the phone. It also will not insist on payment via gift card or wire transfer.
4. Social media scams: Scammers use information from your social media account for a variety of fraud including impersonating your friends to get more of your private information. This ruse often ends in tax-related identity theft.
How to Protect yourself: Your "friend" will claim to be in a compromised position and urgently need your personal information. If you get an urgent message from a friend that seems suspicious, be sure to contact that friend privately. You'll often find they're just fine and have no idea what's happening.
5. Refund theft: Scammers steal your identity, file false tax returns in your name, and pocket your refunds.
How to protect yourself: Never share personal information online with an unverified contact, even if the individual promises to assist you with tax filing. We recommend filing taxes early, at the beginning of the season. This will prevent the scammers from filing taxes with your information.
6. Senior fraud: Scammers can sometimes post as elderly caregivers. They'll file tax returns on the senior's behalf and then pocket the money.
How to protect yourself: If you're a senior, be highly suspicious of emails, text messages, and websites asking you to share your information. If you think you're being targeted or have fallen victim to fraud, contact the Nevada Attorney General's Office Senior Protection division. Find more here.
7. Scams targeting non-English speakers: Scammers also impersonate IRS agents to target non-English speakers. They threaten jail time, deportation, or revocation of driver's licenses if an immediate tax payment is not made.
How to protect yourself: The IRS will not threaten taxpayers over the phone or insist upon immediate payment.
8. Unscrupulous return preparers: Alleged tax preparers will reach out to you and offer their services at a discounted or free rate. Be very wary though as they may be looking to steal your personal information, file a tax return on your behalf, and pocket the refund. Sometimes they promise a higher refund if you pay them a substantial fee.
How to Protect yourself: If a tax preparer is not willing to share their preparer Tax Identification Number (TIN) with you, they are likely a scammer. Avoid preparers who promise credits and deductions that sound too good to be true.
9. IRS Compromise scams: In this scam, bogus tax debt resolution companies make false claims about settling tax debts for "pennies on the dollar" through an Offer in Compromise (OIC). The scams often charge a substantial fee to help.
How to protect yourself: An OIC that sounds outrageously attractive is likely bogus. You can use the IRS's OIC tool to see if you qualify for an authentic offer.
10. Fake payments with repayment demands: A scammer steals your personal information, files a fake tax return on your behalf, and has the refund deposited into your checking account. The scammer then calls you impersonating the IRS claiming the refund was mistakenly inflated, so now you must return the extra funds via gift card or wire transfer. Of course, this money will go directly into the scammer's pockets.
How to protect yourself: The IRS will never deposit a refund check into your account if you have not filed taxes. Also, the IRS does not demand payment by a specific method.
11. Payroll and HR scams: Scams target tax professionals, employers, and taxpayers to steal W-2s and other tax information. They will then impersonate you and request to change your payroll direct deposit information to a different account.
How to protect yourself: If an employer or HR representative receives a request for a direct deposit change, it's best to check with the employee directly to see if the request is legitimate.
12. Ransomware: Malware infects a computer, network, or server and tracks your keystrokes and/or other computer activity. Sensitive data is then encrypted and locked. When you try to access your data, you'll receive a pop-up message demanding a ransom payment for the return of their information.
How to protect yourself: Never open links embedded in emails from unverified sources. And never download tax software unless it features multi-factor authentication.