As the April 15 tax filing deadline draws closer, tax scams will become more prevalent. For criminals, the combination of stressed-out filers and tax returns filled with personal information is an opportunity too great to ignore. According to Jackson Hewitt Chief Tax Information Officer Mark Steber, hundreds of thousands of people will fall victim to tax scams this year, resulting in millions – if not billions – in dollars lost.
The key to keeping your personal and financial information safe is to educate yourself and act quickly if you fall victim. Here are the common tax scams to be aware of in 2023.
Tax Identity Theft Scams
Identity theft occurs every 22 seconds in the US, and this alarming statistic is only magnified during tax season. Tax identity theft scams occur when criminals use your Social Security number to file a tax return in your name to claim your refund. There are several warning signs to look out for with tax identity theft, including:
Notification from the IRS via postal service that your tax return has already been filed
The IRS rejects your e-filed tax return because one has been submitted using your Social Security number
Notification from the IRS that an account has been created on the IRS.gov website that you never initiated
A tax transcript from the IRS that you never requested
How to protect yourself from tax identity theft scams: Never provide your personal or financial information via email or phone. Additionally, you should check your banking statements regularly for suspicious activity and set up transaction alerts within your mobile banking app. You can also obtain an Identity Protection Pin (IP PIN), which is used with your Social Security number to confirm your identity when you file a tax return.
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Gift Card Scams
With gift card scams, thieves pose as the IRS and call would-be victims with one goal in mind: to steal their money. Fraudulent callers will tell you that you owe taxes and demand immediate payment using a pre-loaded debit card or gift card. In addition, criminals may use abusive language and threats to further pressure and confuse the victim. They may also rig caller IDs to falsely show that the call is from the IRS and even know the last four digits of your Social Security number.
Gift card and pre-loaded debit card scams are common during tax season and the holidays because it’s almost impossible to trace fraudulent transactions.
How to protect yourself from gift card scams: Know that the IRS will never call individuals about taxes payments or penalties. Additionally, the IRS will never request payment using gift cards, pre-loaded debit cards, or wire transfers. If you think you might owe federal taxes and receive a call from someone claiming to be with the IRS, hang up the phone and call the IRS at 800-829-1040. The IRS will work with you to pay what you owe. If you don’t owe taxes, call and report the incident to the Treasury Inspector General for Tax Administration at 800-366-4484.
Refund Recalculation Scam
Criminals know that taxpayers want the maximum returns possible. To take advantage of this fact, they launch clever phishing schemes designed to steal your personal information and gain access to your banking accounts.
With a refund recalculation scam, criminals send text messages and emails posing as the IRS saying the taxpayer is due more refund than initially projected. The correspondence will look legitimate, often including the official IRS logo. However, by clicking the links contained in the fraudulent messages, individuals are taken to a fake website where they’re asked to enter their personal information, which may include their Social Security and driver’s license number. Once the user hits submit, the criminal has all the information they need to steal your identity, apply for credit or attempt to take out loans in your name.
How to protect yourself from refund recalculation scams: Remember that if there is a tax refund error, the IRS will contact you via postal mail, never by email or phone. Delete any email that asks for your personal information, and never click links, as they may contain malware. Contact the IRS directly if you suspect an error with your tax refund.
Taxpayer Advocate Service Scam
The Taxpayer Advocate Service (TAS) is an independent resource launched by the IRS that assists individuals with tax returns and helps protect their rights. With the Taxpayer Advocate Scam, criminals make unsolicited phones call using a robo-caller or by posing as a TAS employee. As with other phone scams, the call may seem legitimate and appear as if it’s from a TAS office in Houston or Brooklyn. However, once connected with a victim, the criminal will request personally identifiable information, including a Social Security number or Individual Taxpayer Identification Number (ITIN). Once given, the criminals may use the information to steal your identity and access your personal information.
How to protect yourself from Taxpayer Advocate Service scams: Remember that TAS employees will never initiate a call to an individual. The TAS will only reach out if first contacted by the taxpayer.
If you suspect you’ve fallen victim to an IRS tax scam, there are resources to help.
Keep in mind; The IRS doesn’t contact people by email about their tax accounts. Nor does the agency use email, phone, social media, texting, or fax to initiate contact or ask for personal or financial information. So if you get correspondence like this, do not click on a link, open any attachments, or provide your personal information.