- By Jodi Helmer
No one wants to be on the wrong side of the Internal Revenue Service (IRS). So, when what seems like an IRS official calls about an error on your tax return, it’s tempting to hand over your Social Security number or checking account info to make it right. But that’s where you can go wrong — badly wrong. Welcome to the world of tax scams.
More than 5,000 victims were scammed out of more than $50 million over the last three years through a single popular (and ongoing) tax scam like the one above.
“Fraudsters have more information available to them than ever before,” notes Julie Miller, a spokesperson for Intuit, creator of TurboTax. “That, combined with the lure of a tax refund — which last year averaged $2,800 for the 75 percent of Americans who got a refund — creates the opportunity to find new ways to take advantage of taxpayers.”
More information available combined with the lure of a tax refund creates the opportunity to find new ways to take advantage of taxpayers.
— Julie Miller, Intuit
How Victims of Tax Scams Get Snared
Scammers use email, snail mail, phone and even social media to lure unsuspecting victims into giving up sensitive data or opening their wallets.
Among the most popular tax scams:
- Phone calls asking for Social Security numbers to “complete” taxpayers’ returns (which the scammers then use to open credit card accounts)
- Mailing out what look like tax bills (but aren’t) and requesting immediate payment
- Sending out official-looking emails encouraging victims to click on a link to check the status of their tax refund “It’s a phishing scam designed to get you to enter your Social Security number,” Miller explains. “Even if you simply click the link, you can invite malware into your PC.” (To safely check the status of a refund, to go the IRS site and use its “Where’s My Refund?” tool).
Scammers Getting More Aggressive
Tax scams have gotten more creative and scammers have become more aggressive, says IRS spokesperson Clay Sanford.
“All IRS employees have badge numbers; scammers know this and are giving out fake names and badge numbers to make themselves sound more authentic,” Sanford notes. “Some will threaten you with arrest for not paying your ‘tax debt’ on the spot.”
The Obamacare Tax Con
The crooks also leap on new or changing tax rules to generate new cons.
For instance, there’s The Affordable Care Act (ACA) scam. It involves victims receiving a supposed IRS email or social media outreach along with what appears to be a CP2000 notice (the kind the IRS uses to communicate that income it has on file doesn’t match what’s on your tax return). The “IRS” tells the taxpayers that they must make payments of ACA-related taxes immediately.
Just one problem making these bogus: the IRS never contacts taxpayers via email or social media. “If there is an issue with your tax account, whether you forgot to sign your return or you owe taxes, we will send a notice through the mail,” Sanford says. “We do not send unsolicited emails.”
The Student Loan Fraud
A newer tax scam targets people with student loans. Scammers posing as IRS agents call and demand payment for a nonexistent “Federal Student Tax.” Some insist the debt be eradicated with a prepaid debit card, a credit card or an iTunes gift card and threaten victims with arrest for not settling their debt on the spot.
Miller notes, however, that the IRS does not demand immediate payment or require that tax debts be paid in certain ways like prepaid debit cards or iTunes gift cards. These kinds of demands should be immediate red flags, she says.
One Bright Spot
There is a small bright spot in this seamy scammy world.
“Over the last two years, through the IRS Security Summit process, there have been a multitude of new anti-fraud and security measures put in place across the IRS, states and the tax preparation industry to help protect taxpayers,” says Miller.
The IRS reported that it stopped $1.1 billion in fraudulent refunds between January and April 2016 alone.
Both the IRS and TurboTax post information about scams on their sites. And if you have concerns about the legitimacy of an IRS notice, you can contact the tax agency at 800-829-1040. TurboTax also has an email address — [email protected] — to review possible fraudulent communications.
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