Tax Season Alert: Watch Out for These 3 Common Scams

Tax season is here and it’s time to consider ways to stay safe from scams and frauds. As Americans are working on their taxes to meet the deadline, cyber criminals are out in full-force to hunt for your personal and financial information.

For most people tax season is stressful and confusing. Though, there are some people who enjoy it: scam artists. This season brings numerous opportunities to mug innocent people from their hard-earned money. In the last few years, many people have lost millions of dollars to such scams.

According to an estimate by The Internal Revenue Service (IRS), they have paid about $3.1 billion in fake refunds in 2014. IRS has also identified a list of tax scams which impacts thousands of people.

Here are three tax season scam variants worth highlighting:

Phishing and Malware Scams

Most phishing scams work by sending conceivable emails, text messages and websites. They look like they are coming from a company executive to people having access to financial department employees or human resources. Such mails and websites trick you into providing your credentials, credit cards and sensitive information.

This requires sending an email asking the employee to download all the worker’s W-2 forms. Tax returns are then filed in these names.

Below is an example of IRS phishing campaign in which the recipient is asked to open the attachment and read IRS Privacy Policy. Once the attachment is opened, embedded macros are enabled which downloaded malware.

How to avoid: It is best to avoid these scams by ensuring that you do not click on any mail that is asking for personal credentials. Also, access the government websites directly by writing their name in the browser.

Identity Theft

Identity theft occurs when someone is using your personal information such as Social Security Number or banking information to claim tax benefits or file the deceitful tax return. This scam is particularly malicious as the genuine taxpayer may not have an idea that such as fraud has been committed.

A scammer will try to file as early as possible since it works only when a return has not been filled by the customer. A scam is often detected when a taxpayer receives a notice from IRS or state tax authorities stating an issue with their return.

How to avoid: Try to file your tax as soon as possible and review your credit report for suspicious activities. You should never give your personal information over the phone, text message or any other platform.

Impersonation Scams

Impersonation Scams involve an impersonator who pretends to be Internal Revenue Service (IRS) collection officers or trusted tax authority. They can contact you through call, emails or websites and ask for personal information.

They will tell you that you owe money to IRS and should be paid promptly. Sometimes, they may ask you to pay by strange methods such as prepaid cards and gift cards.

How to avoid: If you owe any money to IRS, they will definitely send an official bill through mail before contacting you through email or phone.

Don’t give out any information and contact TIGTA to report call. Alternatively, you can also use IRS Impersonation Scam Reporting web page.

Image Source: FTC Infographic

How do you report a scam?

1. IRS encourages tax payers to report tax frauds or send suspicious emails to its email account: [email protected].
2. If you think you have been a victim of such tax scams, visit the Federal Trade Commission’s website, where you can find assistance and step-by-step plan to take further action.
3. You can also call US Treasury Inspector General at (800) 366-4484.
4. File complaint on Federal Trade Commission website.
5. If you believe that some has fraudulently submitted a tax return or used your Social Security number, call the IRS at 800-908-4490.

All taxpayers have set of fundamental rights they should be aware of. You can explore these rights to protect yourself on the IRS website.