Protect Yourself from These Tax Scams During Tax Season
IRS-related tax schemes become more sophisticated each year, especially during tax season. By being aware of tax scams and how scammers operate, you can take steps to protect yourself. Below are some common tax scams, including fake charities, tax identity theft, and phishing scams, and tips on how to avoid falling victim to them.
Fake charity tax scams
Charitable giving is one way investors can give back to their favorite causes and save on taxes. However, tax scammers can take advantage of this generosity by convincing high-net-worth individuals to donate to fake charities, creating a charity LLC, or running an art donation scheme.
You should be wary of anything promoted as a way to transfer assets, to grow wealth “tax-free” as part of a donation, or other red flags mentioned by the IRS.
How you can protect yourself:
- Verify that the charity you want to donate to is listed on the IRS Tax Exempt Organization Search Tool,
- If a charitable organization pressures you and demands money over the phone, it may be a scam.
- Make donations directly through an organization’s website - not any links that may appear on a random email request.
Tax-related identity theft
If you’ve ever had your data stolen as part of a data breach, scammers may use it to try and file a return with your info – and claim your refund. The U.S. Postal Inspection Service recommends that you should be aware of receiving a 1099 or W2 for an employer that you don’t recognize, or a separate tax return filed under your social security number. If this happens, you can notify the IRS and Postal Inspectors that you might be a victim of tax-related identity theft.
How you can protect yourself:
- Shred any documents that contain identifying financial information.
- Don’t give out any personal information over the phone.
- If you believe you have been a victim of tax refund fraud, you can place a credit freeze and/or fraud alert on your credit report through each of the major credit bureaus.
Phishing scams are getting more sophisticated
Phishing scams are not new, but scam methods are becoming more advanced. A recent scam alert from the Better Business Bureau warns of a text sent to taxpayers, notifying them of a $1400 stimulus check they can claim. The link appears to come from the IRS website but is designed to steal your personal information. Scammers may also use AI to impersonate the IRS or someone you know. Often, these scams reach you in two ways: first, you might receive a fake email may be sent, followed by an urgent voicemail.
How you can protect yourself:
- Phishing scams may be hard to detect, but there are signs. Look for misspellings, odd links, and never download attachments from senders you do not recognize.
- If you get a strange call, text, or email from someone you know, try reaching out to them on a separate channel to verify.
How the IRS may contact you
According to the IRS website, initial contact by the IRS is usually only through a letter via the USPS. The IRS will only email or text you with your permission and may call to discuss your case, verify details, or set up a meeting. Faxes are sometimes used for employment verification, and in-person visits are rare, usually preceded by an official letter. If you are visited in person by someone from the IRS, you can ask for identification.
The IRS will not contact you via social media, ask for or accept payments through gift cards or debit cards, leave pre-recorded voicemails, or mail any advertisements for tax debt resolution.
Protect yourself from tax scams this tax season
Tax scams can happen year-round, but they are especially high during tax season. Staying informed is the best way to protect yourself from tax scams. If something seems suspicious – an unexpected message from the IRS, a too-good-to-be-true refund offer, or a high-pressure donation request – take a step back and verify before taking action. Do not give out sensitive information or click on any links if you are unsure where they originated.
If you have any concerns about your tax return, suspect potential fraud, or simply have questions about your taxes, Chatterton’s tax preparers are here to help. Contact us today to review your tax situation and to help ensure your filing is accurate.
