Tax scams are among the most stubborn cons out there. They reappear often, each time with a slightly different spin.
Better Business Bureau advises taxpayers to watch out for these four tax scams:
IRS impersonation scams
According to the 2022 BBB Online Scams Report, impersonating an authority figure or organization accounted for 54% of online purchase scams.
IRS impersonation scams most often start with a phone call from a fake IRS agent. The “agent” says you owe back taxes and pressures you into paying by prepaid debit card or wire transfer. If you don’t comply, the scammer threatens you with arrest and fines. This information can later be used for identity theft.
The callers are professional criminals who sound official with fake badge numbers and names. Knowing how the IRS communicates can help consumers avoid this type of fraud.
Tax identity theft scams
Identity theft was the top fraud reported to the FTC in 2021.
Tax identity fraud occurs when a scammer uses another person’s social security number to file a tax return and claim a refund.
Unfortunately, many people don’t realize there is a problem until they file their return and receive a notice that their taxes have already been submitted.
Email phishing scams
This scam involves an urgent email directing the person to update their file immediately and includes a link to a bogus website that looks like the IRS site.
Once on the site, they want to collect your personally identifiable information, which can lead to identity theft.
Ghost tax preparer
Hiring a tax professional can save individuals time and money, but it’s important to make sure they have the right credentials.
A ghost tax preparer is a fly-by-night operator who hasn’t received a Preparer Tax Identification Number (PTIN), which the IRS requires for anyone who does taxes in return for compensation.
When hiring a tax professional, ask them for their credentials, verify that they have a PTIN, and check their profile on BBB.org.
Avoiding a scam this tax season can be done by following these steps:
File your taxes as early as possible before a scammer can use your information to submit a fake return.
Jot down the six-digit Identity Protection PIN (IP PIN) from the IRS before you file your return. The IP PIN is another way to confirm your identity; however, once you apply for an IP PIN, you must use it each year.
Verify you are on the IRS website, irs.gov, and not a fake one. Avoid clicking on links that direct you to a website.
When sharing your tax documents with a tax professional online, ask if the preparer has a secure portal to upload documents. If you need to email, make sure your documents are encrypted.
If you are a victim of identity theft, contact the IRS at 800-908-4490, and begin your identity theft recovery plan at identitytheft.gov.
For more information, visit our Tax Tips & Resources page at bbb.org/all/taxtips. To report a tax scam, go to BBB Scam Tracker.