Tax scams are far from new, but the IRS always sees a significant increase in tax scams targeting unsuspecting victims during tax season. And as we become savvier to tax scams, criminals are already working on a new way to steal our money or identity.
One of the top reasons tax fraud increases during tax season is that people would not find it odd to be contacted by the IRS for additional information. Plus, we all know that the deadline for getting our taxes in is just around the corner in April.
Whether you file on your own or use a tax specialist, you are at risk of falling victim to a tax scam. Tax scams during tax season often look different than the tax scams we see throughout the year, which is why it is vital we know how to identify these scams.
Unfortunately, like many scams, tax season scams often impact the senior community more than other age groups, which is why we must educate ourselves on how to avoid being a victim.
Though it is easier to be scammed during tax season than other times in the year, there are a few ways you can be proactive at protecting against fraud. One of the top ways is knowing how the IRS works when it comes to communication and collection. Another way to protect yourself is by knowing what tax scams are out there.
What You Need to Know About the IRS
Few people in this country would willingly ignore an email or phone call from the IRS, especially seniors. Unfortunately, scammers know this about us, which is why they disguise themselves as employees of the IRS when they contact you.
The good news is the IRS has some strict practices regarding how they communicate with taxpayers and the way in which they will collect money when owed.
- The IRS does not use email, text messaging, or social media to contact people when additional information is needed.
- The IRS does not demand immediate payment via phone, email, or text.
- The IRS will not require the payment to be made in a specific form such as wire transfer, bitcoin, or money transfer apps.
- The IRS does not accept store gift cards.
- You will always be given the right to appeal or dispute any charges.
- The IRS will never send the local police or immigration services to your home or place of employment.
- The IRS cannot take your driver’s license, state ID, or business license.
- The IRS will initiate communication using the US postal service.
- The IRS does make housecalls but should provide two forms of identification – an HSPD-12 card and a pocket commission. You can call the IRS to verify the credentials provided
- Electronic Filing Identification Numbers
- Suspended Social Security Number
- Identity Verification
- Tax Account Transcript
- Taxpayer Advocate Service
Electronic Filing Identification Numbers
Scenario: In today’s world of technology, many seniors choose to take the easy route and file their taxes online or request a tax specialist file for them. And why not? E-filing is fast and easy. Unfortunately, scammers have found a way to use e-filing against unsuspecting victims.
The criminals send out an email claiming to be with the IRS, stating that you need to go through the verification process to file online. To complete the verification process, you need to email your Electronic Filing Identification Numbers, EFIN, and a copy of the front and back of your license or state ID. The email will also further state that failure to complete verification will result in freezing your account.
Scam: Once the criminal obtains your information, they will go online and file a false tax return under your name with your EFIN for a refund. Unfortunately, it takes time to get this sorted out, and by then, the criminal has gotten away with their money.
How to Avoid It: Delete the email immediately. The IRS does not verify your information via email. Do not hit reply, click on a link, or respond to the communication in any way. Even if you don’t provide your information, technically savvy criminals can hack into your computer and obtain what they need to steal your identification.
Suspended Social Security Number
Scenario: In this scam, the victim receives a robocall impersonating the IRS and threatening that unless you comply and speak to an operator now, they will suspend your Social Security number. Which for many seniors means not receiving their Social Security money, and that is downright scary.
Scam: Using fear tactics, the scammer will get you to talk to an operator who will further threaten your financial well-being unless you comply by verifying your personal information or, more likely, will demand immediate payment for a made-up delinquent balance.
How to Avoid It: The IRS does not use robocalls to connect with taxpayers, so hang up. Also, the IRS will not request immediate payment or personal information over the phone.
Scenario: We have all gone through multiple identity verifications for various reasons, from talking with the utility company to the credit card company, so it is no wonder we are so willing to provide this information.
And scammers know that most seniors will not question a person claiming to be an authority, so getting us to verify our personal information is quite easy.
Scam: Scammers use various techniques, including phone calls, emails, and text messages. Some scams will even direct you to a website that looks identical to the IRS but is instead a fake. The website will guide you to fill out a form that will provide the fraudster with everything they need to steal your identity.
Once a criminal obtains your personal information they will steal your identity and leave you with nothing but headaches, debt, and a bad credit score.
How to Avoid it: Remember how the IRS works, ask yourself would the IRS call or email asking for this information? The answer is a resounding “no.” So hang up, move the email to the trash, and delete the text.
Do not engage in conversation at any point with the scammer. Fraudsters are fast talkers and can even get the wisest person to believe theirs lies. Don’t give these criminals a chance to get your information, instead end the communication before it starts.
Tax Account Transcript
Scenario: The tax account transcript scam has been around since 2018 and is still used today. The scammer sends an email supposedly from the IRS, with an attachment in the email titled “Tax Account Transcript.”
The email will also contain additional verbiage to add to the email’s appearance of legitimacy.
Scam: The criminal wants you to click on the attachment as most people would, but once you do, the email will download malware onto your computer so the criminal can steal your personal information such as usernames, passwords, banking information, and credit card numbers.
How to Avoid It: If you receive an email with the subject “Tax Account Transcript” or something similar, delete it; the IRS did not send it. The IRS will not send you unsolicited emails with attached transcripts.
Also, do not reply to the email or click on any link provided, these actions can give scammers access to your computer.
Taxpayer Advocate Service
Scenario: What makes scams so easy to fall for is that most criminals claim to be with legitimate organizations, such as the Taxpayer Advocate Service, a department within the IRS.
You receive a call from a fraudster stating they are from the IRS with the Taxpayer Advocate Service and will demand payment or state you have an unclaimed refund.
Scam: These calls are intended to get you to pay them over the phone or to gain your personal information. Either way, the end result is that the scammers are attempting to steal from you.
How to Avoid It: Hang up. Unless you initiated contact with the Taxpayer Advocate Service, they will not reach out. Any unsolicited communication from this IRS group is sure to be a scam, especially since the Taxpayer Advocate Service is designed to help taxpayers who request it and is not a proactive service.