It’s Tax Season: Don’t Fall Victim to Fraudulent Claims & What to Do if Compromised
Love it or hate it, every April brings the “taxes due” deadline, which also marks the end of tax season — a period that presents significant financial decisions and the looming threat of tax fraud for many. The arrival of the 2024 tax season serves as a reminder of our increasingly vulnerable financial data. In an age where information is more accessible than ever, this vulnerability extends beyond the scrutiny of the IRS to include potential exploitation by fraudsters. These criminals are skilled at going after vulnerable people and using weak security to benefit themselves.
Recently, Florida’s Attorney General, Ashley Moody, launched the 2024 Tax Season Scam Series and shared that in 2022, “consumers lost $5.7 billion to tax scams and fraud.” This underscores the importance of being vigilant as you prepare and file your taxes. This blog is a comprehensive guide to tax return fraud prevention, designed to equip you with the necessary knowledge, strategies, and determination to protect yourself effectively.
Common Tax Fraud Scams You Need to Know
With technology advancing faster than ever before, there are a myriad of tax scams that prey on unsuspecting individuals. Targeted at taxpayers, tax professionals, and even payroll employees, the IRS has identified several schemes that have become increasingly sophisticated and widespread. Here are some of the most common tax-related scams that you need to be aware of:
- Phishing Schemes: Cybercriminals often use fake emails or websites to steal personal information. Always verify the authenticity of any communication claiming to be from the IRS.
- Phone Scams: Impostors posing as IRS agents may threaten arrest, deportation, or license revocation. Remember, the IRS will never demand immediate payment or personal information over the phone.
- Identity Theft: With personal information, scammers can file fraudulent tax returns in your name. Safeguard your Social Security number and monitor your credit report regularly.
- Unscrupulous Tax Preparers: Some preparers may promise inflated refunds by falsifying information. Choose a reputable tax professional who signs your tax return and provides a copy for your records.
- Fake Charities: Donations to charitable causes can be tax-deductible, but scammers exploit this by masquerading as legitimate organizations. Verify the charity’s status through the IRS website.
Interested in learning more about tax scams? The IRS has a video resource library that is extremely helpful.
Training Your Instincts to Spot Fraudulent Tax Schemes
Being informed is your strongest defense for tax return fraud prevention. Here are some red flags to be on the lookout for:
Suspicious Outreach Methods
- Unexpected Phone Calls or Pre-Recorded Voicemails: Legitimate IRS communication starts via mail, not unsolicited phone calls. Similarly, the IRS does not leave urgent or threatening prerecorded messages.
- Unsolicited Emails: Authentic IRS contact does not occur through email. Avoid interacting with or responding to these messages.
- Text Messages or Social Media Contact: Receiving text messages requesting personal or financial information from the IRS is a scam attempt. Do not respond to the text messages. Also, know that the IRS will never request personal or financial details via social media platforms.
Unverifiable Forms or Identification
- Unrecognized IRS Forms: Verify the authenticity of any IRS forms by checking their presence on the official IRS website.
- Identification Verification: Genuine IRS agents can provide a pocket commission and an HSPD-12 card for verification. It is within your rights to request this, so if you have doubts, just ask.
Payment Demands and Legal Threats
- Requests for Payment Information over the Phone: The IRS does not ask for credit or debit card numbers over the phone.
- Demands for Payment via Gift Cards: Official tax payments are made to the U.S. Treasury, not through gift or prepaid debit cards.
- Threats of Legal Action: The IRS cannot revoke licenses or threaten arrest without due process. You have rights, including the right to question or appeal what you owe.
How to Report Tax Fraud Scams
If you suspect that you’ve encountered a tax scam, taking swift action can help protect not only yourself but also your community from potential harm. The IRS encourages individuals to report suspicious activities through specific channels. Additionally, to combat IRS scams, including phishing attempts and fraudulent calls, you can contact the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484. To report general fraud to the Federal Trade Commission, go to ReportFraud.ftc.gov. Here you have the option to provide as much detail as you feel comfortable sharing; just be sure to note that you’re reporting tax-related scams when sharing with the FTC.
What to Do if You’ve Been Compromised
Discovering that you’ve become a victim of a tax fraud scheme can be distressing, but it’s crucial to know that there are steps you can take to mitigate the impact. The first thing you should do is report it right away to the IRS using the most applicable channel. Then you’ll need to begin the process to secure your accounts, file disputes, correct any false information in your credit reports, and exhaustively prove your identity to tax authorities. It’s a marathon, not a sprint, but diligence will see you through to the finish line.
If you find yourself in a compromised situation, our team of experts is dedicated to providing tailored legal advice that suits your specific needs. We offer complimentary consultations to assess your unique circumstances. Occasionally, after a thorough review, we may find that your case is better suited for another attorney outside of our firm. In such instances, we will always make the best judgment call for your situation, even if it entails referring you to an attorney within our trusted legal network.