The Internal Revenue Service opened for the 2018 tax season on Monday, Jan. 29. And while you may be among the many taxpayers across the country busy collecting tax documents and filing returns, there is a reason to be cautious as you work. Each year, fraudsters emerge from the shadows on a mission to steal your hard-earned money, and this year is no different.
To help you avoid some of the most common scams, here’s a list of what to look out for this tax season.
1. Tax identity theft
Criminals love stealing taxpayer’s personal information to file fake tax returns and get access to tax refunds that don’t belong to them. Unfortunately, many taxpayers don’t know they are a victim of identity theft or that their information was compromised until it’s too late. That foul play often goes undetected until the IRS rejects the return the taxpayer eventually files because it’s a duplicate.
Fraudsters can get ahold of your personal information in multiple ways. For example, they can skim your credit card numbers from an ATM, send a “phishing” email, obtain your credit report or impersonate an organization over the phone. Many go to any length necessary to get what they want, whether it’s just your full name or something as sensitive as your Social Security number.
Filing your federal return as early as possible is one way to reduce the odds of tax identity theft. It shortens the window of opportunity a criminal has to submit a tax return in your name. You should also work extra hard to protect your private information by not carrying your Social Security card in your wallet or purse and using strong passwords to safeguard your email and online bank accounts.
If you think you have fallen victim to tax identify theft, you should immediately file a complaint with the Federal Trade Commission, contact a major credit bureau to place a “fraud alert” on your credit records, and reach out to every financial institution you do business with to make them aware of the situation.
2. IRS phone scams
Criminals impersonating the IRS are a threat each filing season. Many IRS phone scams involve bullying a taxpayer into paying a fake “tax bill” using a variety of fear tactics. Some threaten police arrest, deportation, or license revocation if they don’t immediately receive the money.
While altering caller ID names and using fake IRS badge numbers is an easy way to push taxpayers into a trap, there are a few things the IRS will never do that can help you detect fraudulent activity. The IRS will not:
- Call to demand immediate payment. In fact, they won’t call you about any taxes owed without sending a bill through the mail first.
- Force you to pay in full without the opportunity to question or appeal the billed amount.
- Ask for credit card numbers over the phone
- Threaten to arrest you if you don’t pay.
If you get a phone call from someone making those demands, there are two different ways to handle it based on your situation.
If you think there’s a good chance you owe taxes, hang up and call the IRS at 1-800-829-1040. Ask that IRS worker for assistance in verifying the information before giving your credit card information to someone else.
If you believe you don’t have a tax bill, hang up immediately, and call 1-800-366-4484 to report the suspicious activity. As a second step, you can report impersonation scams to the Treasury Inspector General for Tax Administration.
The Taxpayer Guide to Identity Theft provides additional information to help you manage the situation.
3. Email phishing scams
Phone calls are not the only way criminals will reach out to taxpayers looking for money. Be on guard against fake emails trying to phish your personal data or bank account information too. Phishing scams include fraudulent email messages appearing to be from a legitimate business. Typically, they direct you to a spoofed website or ask you to reply with your private information. Sometimes they can even be specifically directed at you, including your name and job title.
A common phishing email red flag is messaging that pressures you to “click here” to verify your information or risk losing access to something, like an email or bank account. If you receive that type of email, you should understand most genuine businesses won’t take that type of action against their customers. That’s a good indication you’ve identified a fraudulent email.
The best defense against phishing emails is to carefully discard any documents containing your private information so that they don’t wind up in the hands of a criminal. You should also always be highly suspicious of any email asking you to enter personal information, click a link or open an attachment. If it seems untrustworthy, don’t click the link. Instead, contact that place of business directly to inquire about the request.
You can report phishing scams to the Federal Trade Commission or the Anti-Phishing Working Group.
4. Online tax filing impersonations
Similar to impersonating the IRS, tax criminals pretend to be representatives of popular online tax filing companies too. Those particular scammers stage fake websites using the real tax company’s likeness to trick customers into paying them money.
For example, tax scammers will create a website in a credible company’s name offering support services for a fee. They may even pay an internet search engine money to make their website link one of the first a customer sees if they search for support. When a customer finds that link and calls the helpline, the scammer will ask for payment before answering the customer’s questions. Once the customer provides their credit card number and the transaction is complete, the scammer will drop the call.
If you need help when using an online tax filing product, double check you have the right website before calling the numbers listed. Ask yourself, does the site contain broken English, simple spelling mistakes or several grammatical errors? If so, it’s probably fake.
You should also pay close attention to the URL in the address bar of your browser. If any portion of it contains an odd combination of letters and numbers, there’s a good chance it’s fraudulent. If the URL starts with HTTP rather than HTTPS, it’s more than likely fraudulent. Secure, safe websites usually start with HTTPS because they went through the necessary certification to be declared secure. Most scammers won’t take the time to push their illegitimate website through the security certification process.
If you’re a TaxAct customer, you can contact our trusted customer service team here. Additionally, when speaking with a TaxAct customer service representative, you will never be asked for your password, full social security number, access to remote into your computer, or bank information, like routing or account numbers. If you are asked for any of that information, immediately hang up and locate the right contact number.