Scams to Watch Out For
While scams are especially prevalent during tax season, they can take place any time during the year. A client recently had a call from someone at Social Security, or so they told her. They coaxed this very intelligent woman into revealing quite a bit about her financial life, using profoundly professional-sounding authority and a sense of urgency about her Social Security number.
The government reports that scams are up again this year. It’s in your best interest to always be vigilant so you don’t end up becoming the victim of a fraudulent scheme.
Here are some of the more common scams to watch out for:
Phishing scams usually involve unsolicited emails or fake websites that pose as legitimate IRS sites to convince you to provide personal or financial information. Once scam artists obtain this information, they use it to commit identity theft or financial theft.
It is important to remember that the IRS or the Social Security Administration will never initiate contact with you by phone or email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media. If you get an email claiming to be from the IRS, don’t click any of the links; instead forward it to email@example.com.
Beware of callers claiming that they’re from a government agency. They could be scam artists trying to steal your money or identity. This type of scam typically involves a call from someone saying that you owe money to the IRS or that you are entitled to a large refund. The calls may even look like they are coming from a legitimate source on your Caller ID, could be accompanied by fake emails that appear to be from the IRS, or involve follow-up calls from individuals saying they are from law enforcement. Sometimes these callers threaten with arrest, license revocation, or even deportation.
If you don’t owe taxes and believe you have been the target of a phone scam, you should contact the Treasury Inspector General and the Federal Trade Commission to report the incident.
Tax return preparer fraud
During tax season, some pose as legitimate tax preparers, often promising unreasonably large or inflated refunds. They try to take advantage of unsuspecting taxpayers by committing refund fraud or identity theft. It is important to choose a tax preparer very carefully, since you are legally responsible for what’s on your return, even when it is prepared by someone else.
A legitimate tax preparer will generally ask for proof of your income and eligibility for credits and deductions, sign the return as the preparer, enter the Preparer Tax Identification Number, and provide you with a copy of your return. Always ask friends and family for references, don’t hire someone you found in an Internet search.
Scammers sometimes pose as a charitable organization in order to solicit donations from unsuspecting donors. Be wary of charities with names that are similar or sound like more familiar or nationally known organizations, or that suddenly appear after a national disaster or tragedy. Before donating to a charity, make sure that it is legitimate. There are tools at irs.gov to assist you in checking out the status of a charitable organization, or you can visit charitynavigator.org to find more information about a charity.
Tax-related identity theft
Tax-related identity theft occurs when someone uses your Social Security number to claim a fraudulent tax refund. You may not even realize you’ve been the victim of identity theft until you file your tax return and discover that a return has already been filed using your Social Security number. Or the IRS may send you a letter indicating it has identified a suspicious return using your Social Security number. If you believe you have been the victim of tax-related identity theft, you should contact the IRS Identity Protection Specialized Unit at 800-908-4490 as soon as possible.
Stay one step ahead
The best way to avoid becoming the victim of a tax scam is to stay one step ahead. Consider taking the following precautions to keep your personal and financial information private:
- Keep an eye out for emails containing links or asking for personal information
- Do not ever open links in emails from unknown senders
- Don’t answer calls when you don’t recognize the phone number. Let them leave a message, so you can think clearly about whether you need to call them back and so you have a record of exactly what they said.
- Maintain very strong passwords
- Use two-step authentication
Finally, if you are ever unsure whether you are the victim of a scam, remember to trust your instincts. If something sounds questionable or too good to be true, it probably is.