Avoiding Tax Scams

It is getting down to the wire for tax season. Your taxes must be filed by April 15th, and if you’re stressed about that, just imagine how upset you’ll be if you become a victim of a tax scam. Criminals are always ready to take advantage of any fear, uncertainty, or rush to trick you into making unwise choices with your money. 

Every year the Internal Revenue Service puts out a list of the Dirty Dozen Tax Scams. The most common is phishing, in which a scammer sends an email or text claiming to be from the IRS to trick you into sharing personal information or downloading something that will give the scammer access to your accounts. They might also claim to be a tax preparer or tax software company. They may play on your fear, telling you that you owe money and might go to prison. Or they might play on your greed, saying that you have an unexpected refund. 

Scammers may appear to be helpful, offering ways to navigate the confusing world of taxes. They may offer to help you set up your online IRS account, and then steal your information. Using that, they may file a fraudulent tax return in your name, and collect the refund themselves. 

If you itemize your deductions, you may be looking for a place to make a charitable donation. Scammers will take advantage of your generosity, soliciting you with fake charities and playing up how much donating to them will help reduce your taxes. However you only get a deduction if you give to a legitimate tax-exempt charity. Otherwise, scammers get your donation instead of it going to a good cause, and you don’t reap any tax benefit yourself. 

Social media is proving to be a major source of scams. They might not be targeting you directly, but they are putting out false or misleading information. That might lead you to make errors on your tax return that can lead to you receiving a refund you’re not entitled to. You could be charged with tax fraud, and face an investigation. Instead of keeping a larger refund, you’ll have to pay the money back, along with hefty penalties and interest. Scammers posting on social media as legitimate tax preparers may use outdated tax laws (such as some that only applied during Covid), give false information (making up income and withholding amounts) or tell you that you can get deductions you’re not entitled to. They make money by charging you exorbitant up-front fees that are based on the size of the refund.

If you have an outstanding debt to the IRS, there is a program that can help you settle your debts with an offer in compromise. But aggressive, unscrupulous companies will offer to reduce or eliminate your debt for a substantial fee, even if you don’t qualify. You’re left out of pocket for thousands with them, and you still owe the IRS.

Be wary of any contact claiming to be from the IRS. The IRS will almost always first reach out about any change or problem through the U.S. mail. For most communication they won’t email you or text you without your permission, so if you get an email or text out of the blue, it is probably a scam. The IRS may call you, but this will generally be after initial mail contact. If you get a call from the IRS and you’re already working with them on something, the call could be legitimate. But if this is the first you’re hearing from them and have no idea why they would call you, it is likely a scam. They will never use robocalls or pre-recorded messages. If you have any doubt, don’t answer, but call the IRS at their main number (1-800-829-1040) or contact your local IRS office. Any IRS officials you meet in person will show you their credentials and identification.