Fraud That Targets Taxpayers

As the time of year changes, different types of fraud naturally will rise and fall. With the upcoming tax season, there will be several cons to watch out for, like IRS imposter calls, tax preparer fraud, and stolen refunds. Read on to learn what types of schemes are prevalent, red flags to help you avoid pitfalls, and how to report suspected fraud.

Forms of Fraud

Believe it or not, the IRS wants taxpayers to be educated about the different types of scams out there to protect themselves. Ignorance is not an excuse for breaking the law, and every citizen is responsible for following the rules and regulations of the IRS, even if they hire a professional to handle the filing process. This obligation is why being extremely vigilant when tax season rolls around is so important. Below is a list of tax schemes the IRS warns the public to avoid.

1. Imposter Fraud – One of the most common scams happens when a fraudster poses as an IRS agent, a local law enforcement officer, or a tax professional. You should know that scammers can often change the caller ID information to make it appear that they are from the posing agency. Sometimes, they even come to the target’s doorstep. It is important to note that the IRS will contact taxpayers through an appointment letter. Any taxpayer who receives a request for a meeting should authenticate the invite by contacting IRS Customer Service.
2. Identity Theft – Be careful to examine all the tax forms you receive. If you are issued a document for benefits you did not collect, for example, Unemployment Benefits, do not claim that money as income when you file. The form in question could be an indication of identity theft.
3. Phishing Fraud – Phishing happens when a person receives an email or message that looks authentic but is not. Some scammers are masters at mimicking logos, websites, and overall brand designs of the image they want to portray. These messages may try to steal information or money or attempt to infect computers with malware. The IRS maintains that they do not initiate contact with taxpayers by email, text messages, or social media channels to request personal or financial information.
4. Tax Preparer Fraud – Dishonest tax preparers may engage in fraudulent practices, such as inflating deductions or creating false credits on clients’ tax returns. Every taxpayer is responsible for the honesty and integrity of their filed tax forms, even if they hire a professional to prepare their taxes. That is why individuals must employ the services of trustworthy experts. Additionally, be sure to avoid “ghost” preparers. These people do not sign the tax returns that they prepare.
5. Refund Scams – These scams promise large refunds to taxpayers, then claim credits and exemptions they are not qualified to take. The preparer charges a percentage of the refund as their fee. However, the target is responsible for the consequences of underpaid taxes. Often, the preparer is nowhere to be found. Always look for the third party’s signature on your tax forms.
6. Unclaimed Funds – People should beware of mailers that attempt to deceive them by telling them they are owed a refund. These types of messages try to mask themselves as legitimate IRS communications. Individuals can be confident that the IRS will not send such a letter.

Education of fraudsters’ different tactics is one of the best ways to protect yourself. Take it a step further and share this information with loved ones to help protect them, too.

Protection Strategies

1. High-Pressure Tactics – If you get an unsolicited call and the caller pushes you for a quick action, it most likely is a scammer. When individuals are rushed and don’t have time to think things through clearly, they are more susceptible to scammers’ traps.
2. Verify the Facts – It is crucial to take the time to verify the information you have been given, the identity of the person or company that you are dealing with, and to check for signatures from your tax preparer. This small act can rescue you from possible heartbreak and fraud victimhood.
3. Do NOT Pay Tax Bills with Gift Cards – If you do not know by now, the IRS does not take gift cards as payment. Con artists call unsuspecting people and try to trick them with this scam. Know that if anyone calls and asks you to pay with a gift card, you can be sure they are lying.
4. Ask Questions – Do not skip this step. Ask as many questions as you can think of. Honest agencies will not hesitate to help you and will not get angry with you for doing so. Anytime imposters successfully take advantage of the public, authentic organizations must work harder to prove their integrity.
5. Pay Attention to Grammar and Misspelled Words – If you receive a message with incorrect use of words, bad grammar, or misspelled words, it can indicate a fraud attempt. Tread lightly.
6. Too Good to be True? –Swindlers prey on peoples’ needs and desires. This emotional attachment to our wants clouds our judgment. Do not let “pie in the sky” thinking trap you.

Deceitful people will always exist. Be part of the solution. If you use these methods and share them with others, you can join the fight against fraud.

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How to Report

If you have been a target, know someone who has been a victim, or even suspect fraudulent activity, you should report it to the authorities. In addition to your local authorities, there are many places to give your statement. Here is a list of sources.

Federal Reporting

• Report all unsolicited emails and fraudulent phone calls claiming to be from the IRS or an IRS-related function to [email protected].
• If you’ve experienced any monetary losses due to an IRS-related incident, please report it to the U.S. Treasury Inspector General.

• Report fraud to the Federal Trade Commission.
• Visit the Department of Justice Report Fraud page for a list of ways to report various types of fraud.

Reporting in the State of Florida

• Floridians can report a scam by visiting Fraud Free Florida.
• Tell the Florida Attorney General’s Fraud Hotline at 866-9NO-SCAM or via the No Scam App.