Tax season is the busiest season for tax scammers. Everyone is thinking about their returns and tax scams are in high season.
A recent survey by McAfee found that 21% of all adults in the U.S. had been the victim of a tax scam costing them $1,000 or more. And every tax season brings changes in how these thieves operate.
Here are just a few of the situations being used this season…
1. Fake Emails, Texts, and Phone Calls
Scammers are increasingly sending realistic-looking communications about account issues that appear to be from the IRS, State Tax Agencies or Tax-Software Companies. Advances in artificial intelligence allow them to clone voices or create fake videos of IRS agents.
These messages can claim you owe back taxes and threaten penalties or immediate arrest. Their aim is to get taxpayers to provide Social Security Numbers and banking information by clicking links to fake “IRS portals” that install malware or steal personal data.
Please note that the IRS doesn’t initiate contact by email, text, or social media to request personal data, ask for financial information, or to threaten arrest. If this happens to you, either hang up the call or delete the message immediately.
2. Fake Refunds And Tax Credits
Bogus tax professionals on TikTok, Instagram, and other social media platforms claim they can help you secure large refunds when they help you file your return. These scammers use official-sounding language and give fraudulent advice urging taxpayers to claim fake tax credits or legitimate credits for which they aren’t eligible.
Their goal is to take a percentage of the fraudulent tax credit or refund before the IRS catches the error. These actions can lead to an IRS audit, penalties, and even criminal charges for the taxpayer.
Please note that any preparer charging a contingency fee based on a percentage of your refund is breaking federal and state laws. Ignore any social media posts claiming everyone qualifies for certain tax credits or promising fast refunds with minimal documentation.
3. Ghost Tax Preparers
These preparers are often unlicensed individuals who complete tax returns for a fee but refuse to sign the returns. They often invent income or claim fake deductions to inflate refunds, leaving the taxpayer liable for fraud.
Many charge fees based on a percentage of your refund. Some will demand cash payment without providing a receipt, while others have the refunds directed to their own bank account instead of the taxpayer.
Preparing a return for a fee without the preparer’s signature is a federal crime. If your preparer doesn’t want to sign your return, do yourself a favor. Don’t walk.
Run.
4. Debt-Forgiveness Fraud
Tax-debt forgiveness or IRS settlement scams target taxpayers who owe the IRS money for various reasons. These may include back income taxes, penalties related to unfiled tax returns, unpaid self-employment taxes, or audit assessments.
Many use robot calls to lure victims, and others are unscrupulous tax-resolution firms that advertise on radio, TV and other media platforms. Typically, they promise guaranteed IRS debt forgiveness and settlements, charging upfront fees without delivering debt relief.
Please note that the IRS primarily reduces tax debts through a process called Offer-in-Compromise. Most of the time, people seeking debt relief don’t qualify because they either will have the income to pay the debt over time, or can currently settle the debt using equity in the assets they already own.
Don’t believe any firm that guarantees it can settle your tax debt “for pennies on the dollar” for an upfront fee. And any firm claiming that the IRS has a “New Debt Forgiveness Program” that can help a debtor is also lying.
The Offer-in-Compromise process has existed much longer than I have. And given the fact that I’m only 28 just like the rest of you, its been around for a while.
5. Charity Scams
Many scammers pose as legitimate charities around tax time to solicit donations. They often claim donations are required for certain tax benefits or suggest donations can reduce taxes dollar for dollar.
Please note that charitable deductions reduce taxable income. Taxes owed are a percentage of that taxable income. Only a tax credit will reduce taxes owed on a dollar for dollar basis.
These scammers often target high-income taxpayers looking for deductions and steal money and personal information. They might also claim that they’re working with the IRS or use names that sound similar to legitimate charities.
To guard yourself against fraud, research any charity before making a donation and use only a check or credit card for donations. Never use a gift card or a wire transfer.
Let me leave you with this…
I’m writing this piece because a nice lady from the neighborhood who isn’t a client of mine just got taken to the tune of $5K. Let me explain how the scam worked.
It’s easy to get information on individuals and businesses that owe tax debts. Once a lien is filed, it’s published and a matter of public record.
The scammer will know your name, how much you owe, the relevant tax year, and even the tax type. At that point they only need to find your telephone number and place a call.
In this instance the Fake IRS Agent called and told her that if she didn’t send them five grand immediately they’d put her in the slammer, so she wired them the money. It happens all the time.
Last year, an operation in India that employed three hundred telemarketers was shut down. It’s estimated that they’d fraudulently taken in millions over the three years that they operated.
As technology improves, so do their scams. Beware.
It could happen to you.
If you’re having any difficulties whatsoever with your accounting and tax work, we’d love to help and are waiting for your call.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
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