Each year, the Internal Revenue Service (IRS) issues a list of common tax schemes and scams they call the “Dirty Dozen.” Taxpayers can fall victim to these scams at any time, but they tend to peak during tax filing season. The keys to avoiding becoming a victim? Educate yourself about what’s out there and take steps to protect yourself and your tax data.
To help you get started, here’s a summary of the most commonly used scams in 2017:
. Phishing is a scam where criminals attempt to steal your financial information through the use of email or a fake website. In many cases, the bogus emails ask for specific personal information or try to get you to click on a link to install spyware or other malware on your computer. Remember that the IRS doesn’t initiate contact with taxpayers by email to request personal or financial information, so don’t click on or respond to these kinds of emails. If you receive an unsolicited email that appears to be from the IRS, you can report it by forwarding it to firstname.lastname@example.org
. Also be careful with emails purporting to be from individuals or companies asking for personal or payroll information (like this one
making the rounds). When in doubt, assume it’s a scam.
- Phone Scams. Callers posing as agents from the IRS attempting to collect bogus tax debts topped the list of the most reported scams of 2016, according to the Better Business Bureau. Those IRS phone scams accounted for 1 in 4 reported scams last year. Fortunately, following a number of high-profile arrests, those IRS-related phone scams appear to be on their way down – but not out. Typically, in the scheme, callers posing as IRS representatives say the victims owe money and then threaten arrest if the amount is not paid immediately. Scammers will use fake names and IRS badge numbers and “spoof” or imitate the IRS toll-free number on caller ID to make it appear that it’s the IRS calling. If you get a phone call from someone claiming to be from the IRS and you’re not sure, and you have a legitimate tax issue outstanding, call the IRS directly at 1.800.829.1040. If you get a phone call from someone claiming to be from the IRS and you know you don’t owe taxes, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484.
- Identity Theft. Identity theft, when someone uses your personal information such as your name, Social Security number (SSN) or other identifying information, without your permission, is often used by scammers to fraudulently file a tax return and claim a refund. The IRS has new protections for taxpayers this year including increased screenings, delayed refunds, and verification codes on some forms W-2. If you believe you are at risk of identity theft due to lost or stolen personal information, contact the IRS Identity Protection Specialized Unit at 1.800.908.4490 or visit the IRS’ special identity protection page.
- Fake Charities. Watch out for groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Bona-fide charitable organizations have, as their mission, to benefit the public. Fake charities take advantage of taxpayers’ good nature to steal your money and potentially, your identity. To avoid being taken advantage of, donate to recognized charities using check or credit card where possible. Remember that you don’t need to give out personal information, like your Social Security number, for the purpose of obtaining a receipt for your charitable donation. The best documentation on your end is a canceled check or credit card receipt so donate using those means on secure sites whenever possible.
- Inflated Refund Claims. With more than 50% of taxpayers expected to receive a tax refund, it’s no surprise that everyone wants their share – and some, even more than their share. This makes it appealing for scam artists to promise free money in the form of inflated refunds. There are a number of variations on these refund scams, but a number tend to be based on refundable tax credits like the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) – that’s why Congress delayed issuing tax refunds tied to those credits this year. If you make a false claim or receive a fraudulent refund, you can be subject to a penalty and potentially, jail time. Also a risk? The IRS has received complaints of scam victims who lost their federal benefits, such as Social Security benefits, certain veteran’s benefits or low-income housing benefits after filing tax returns with the IRS that provided false income amounts.