Tax season is here, and while you may be focused on getting your taxes filed on time, it’s important to also be aware of the potential scams that are prevalent during this time. The Internal Revenue Service (IRS) has flagged one million tax returns for potential identity theft, and that’s just the ones they caught. Criminals are constantly finding new ways to gather personal information and scam unsuspecting taxpayers. In this article, we will explore seven tax scams that you should be aware of and take steps to avoid.
The first scam on the list is the Unclaimed Refund Scam. Criminals will send you an official-looking letter claiming that you have an unclaimed tax refund waiting for you. They will ask you to provide personal details to claim your refund, but remember that the IRS will never contact you for personal information. Be wary of any communication asking for personal information and always verify with the IRS directly.
Next up is the ‘Ghost’ Tax Preparer Scam. These bogus tax preparers promise to double your refund and manage everything online for your convenience. However, they often inflate deductions fraudulently, which can lead to trouble with the IRS. To avoid this scam, always ensure that your tax preparer signs your tax return and choose a reputable and trustworthy professional.
The Refund Calculation Scam involves criminals contacting you and claiming to be from the IRS. They will tell you that they have recalculated your federal refund and that you are due more money. They will then ask for personal information and banking details to “expedite the return process.” Remember that the IRS will never contact you in this manner, and be cautious of any messages asking for personal information.
The Tax Lien scam targets individuals by posing as a fake agency such as the “Bureau of Tax Enforcement.” They will threaten you with a tax lien if you don’t pay the taxes they claim you owe. If you receive a letter like this, scan it and report it to the IRS. Always verify with the IRS if you have any doubts about owing taxes.
The Offer in Compromise scam preys on individuals looking to eliminate their tax debt. Scammers will promise to help you settle your IRS debt for a fee, but once you pay, they disappear. While the IRS does offer legitimate Offer in Compromise programs, scammers often exaggerate your chances of qualifying. Be cautious of anyone asking for upfront fees and always research and verify before making any payments.
Businesses should be aware of the Employee Retention Credit Scam. Criminals will send direct mail about the employee retention tax credit and charge large upfront fees to process the claim. They will pressure you to apply, even if you don’t qualify. If you believe you qualify for the credit, check your eligibility with the IRS directly. Remember, there are no fees associated with claiming the credit through the IRS.
Lastly, be cautious of scammers offering to help you set up an IRS account online. They will promise assistance but end up stealing your personal information, such as your Social Security number and tax identification number. You can set up your account on your own and contact the IRS if you need assistance.
To avoid falling victim to these scams, it’s important to know how to spot a scammer. The IRS will never email or call taxpayers unsolicited. If you receive an “official” looking form or letter from the IRS, always verify its authenticity before taking any action. The IRS also does not demand immediate payment and has a specific process for collecting taxes. Additionally, they will never contact you through social media.
It’s crucial to be vigilant and skeptical of any correspondence claiming to be from the IRS. If someone requires fees to represent you to the IRS, approach them with suspicion. It’s best to work with a qualified and experienced certified public accountant (CPA) or accountant when preparing your taxes or dealing with the IRS. Their expertise can help ensure that you navigate tax season safely and avoid falling victim to scams.
In conclusion, tax season is not only a time to file your taxes but also a time to be aware of potential scams. The IRS has flagged numerous tax returns for potential identity theft, and criminals are constantly finding new ways to gather personal information and scam taxpayers. By staying informed about the various tax scams and being cautious of any communication asking for personal information, you can protect yourself from becoming a victim. Remember to always verify with the IRS directly and work with reputable professionals when dealing with your taxes.
