Tax Season Scams

See how the imposter scam works and protect yourself from other trending frauds and identity-thieves.

“You owe money for back taxes.” There’s a sentence that can send shivers down anyone’s spine.

Read on for a true-to-life story, based on scams the security team at Broadview encounters in their work and crime trends they follow across the state.

 

Poof! Money Gone

Within the past 24 hours, Courtney was informed she owed back taxes. She managed to pull together $1,250 from her accounts to cover this large, unexpected expense. Then, she rushed to mail her payment to meet the deadline.

Now Courtney has just $38 to her name, and that had to last until her next paycheck! What caused her financial situation to turn upside down so quickly?

 

It Started with a Phone Call

Courtney had never been great with money, but she was getting better – even building a cushion of savings. Each year when she filed her tax return, she worried about mistakes, though. The forms were really confusing. Even so, Courtney always managed to squeak by.

Not this time. The trouble began with one little phone call.

According to Mr. Fields, the IRS official who called her, Courtney owed $1,250 in overdue income taxes. If she didn’t send her payment by the end of the day, he said, she would be arrested.

So, Courtney acted quickly. Gift cards were the fastest payment method, according to Mr. Fields, because checks and other ways to pay would not reach the IRS in time. To beat the end-of-day deadline, she purchased $1,250 in VISA^® gift cards from a department store.

After she purchased the cards, she texted photos of the fronts and backs to Mr. Fields along with the PIN numbers. Courtney breathed a sigh of relief. Even though she only had $38 left in her account, her situation could be a lot worse. At least she wouldn’t be doing jail time.

What Courtney didn’t realize is that she didn’t owe past-due taxes at all. The tax return she filed last year was prepared perfectly. Jail time was never even a possibility.

Courtney had just been scammed by an IRS imposter.

 

Think You’d Never Fall for the IRS Imposter Scam?

People who claim to be officials from the IRS attempt to steal your identity and money. The scammer’s phone call might even appear legitimate according to your caller ID.

Beware of urgent emails, texts, social media posts/messages, and even people at your door claiming there’s a problem with your tax return or attempting to collect past-due taxes.

Scammers posing as IRS officials create a sense of urgency with payment deadlines and threats of consequences if you don’t pay up. They know many people find it difficult to say “no” to someone in authority.

What to do. If you get a suspicious call from the IRS, don’t respond. Worried you might owe taxes? Contact the IRS directly at (800) 829-1040 or www.irs.gov.

 

2 Easy-to-Spot Warning Signs

#1: Contact Method. Were you contacted by an ‘IRS employee’ via email, text messages, or social media?

Fact. The IRS does not initiate contact with taxpayers this way. Ignore it. If the IRS does contact you via email or text, it would only be with your permission. Review the bullets below for information on how to recognize their legitimate contact methods:

• Mail - Typically, the IRS contacts you first by U.S. mail. Most IRS letters include a letter or number. To verify it’s legitimate, search for a letter or notice. Some letters might be from IRS-assigned private debt collection agencies.
• Phone call - Typically, the IRS would mail you first. They might call about an audit or to verify information.
• Website - Their official web address is IRS.gov.
• Fax - Sometimes, the IRS sends a fax to verify employment or request reported income or withholdings.
• In-person visit - Generally, the IRS would notify you by mail before visiting your home or business.

#2: Payment Method. Are you being pressured to pay taxes you owe with a prepaid debit card, gift card, or wire transfer? Does the caller offer to adjust the payment to an amount you can afford? Stop.

Fact. If a taxpayer owes money, the IRS does not require payment in a specific form.

 

How to Protect Yourself

• File your taxes as early as possible, so a fraudster fails if he attempts to submit a fake tax return in your name and obtain a refund.

• If you file electronically, use a secure connection (not a public place).

• Do NOT respond or click links in unexpected IRS emails.

• Worried you owe taxes? Contact the IRS at
  (800) 829-1040 or visit www.irs.gov.

• Freeze your credit to protect against identify theft in tax season and beyond. Thaw it when you apply for a loan or credit card, or when you want to permit a credit check for an apartment, job application, or other purpose.

 

Other Trending Scams

So many frauds are circulating these days, you could be targeted by criminals who want to steal your money or identity. Here are some scams claiming victims on a regular basis.

Tax Prep Scam. Beware of offers for free tax preparation from an unfamiliar source with links to a website.
What to Do. Do not click links in emails or via social media from unfamiliar sources. Instead, visit the company’s official website for information.

Unemployment Scam. You receive a notice from the state labor department regarding an unemployment claim you did not file.
What to do. Don’t ignore it! Report the bogus claim to your state unemployment claims office, the police, credit reporting bureaus, and your state attorney general’s office.

“Just Confirming Some Information.” This scam is so effective, it refuses to die. The identity thief poses as an employee from a company or organization you have a relationship with. She asks you to confirm personal information – your home address, mother’s maiden name, Social Security number, financial account information, employer, etc.
What to do. Do not provide any information. Hang up.

Business Loan and Delivery Scams. If you run a business, keep an eye out for SBA loan fraud or unauthorized billings from criminals hijacking your FedEx or UPS account.
What to Do. Contact the lender or your package delivery service to report unauthorized activity (and open a new account if applicable).

 

Don’t Fall for It

Tax season, financial desperation, and countless changes in our lives are a dream come true for scammers. When it’s all too much, it’s easy to let your guard down and be swindled by people who do it for a living.

Keep tabs on the latest scams, so you don’t end up getting fleeced by an IRS imposter like Courtney did, or scammed by another lurking criminal.

Your best defense to beat the bad guys? Stay informed!

And, if you do come across a tax scam or fraudulent link, report it to the IRS to help prevent others from becoming victims.