It’s tax filing season once more, and time for us all to be particularly mindful of tax scams that exploit honest taxpayers and busy tax preparers. The complexity of the tax code and a general fear and misunderstanding of the Internal Revenue Service (“IRS”) make the tax system vulnerable to scammers, and technology makes it easy for the bad guys to cast a wide net and quickly reach a large number of targets.

Scams you need to know

  • Robocalls. Have you received a robocall telling you that your SSN will be suspended or canceled because you have an unpaid tax bill? Whether you answer the call directly or have a voice mail message, ignore it, hang up, and delete said message. This is a scam. The IRS does not use threat tactics like this to collect outstanding taxes.
  • Unsolicited emails. You receive an email with a subject line to the effect of “Automatic Income Tax Reminder”, “Electronic Tax Return Reminder” or “Tax Transcript” that include a link to what appears to be an IRS website. You are solicited to use a single-use password included in the email to access a site to submit a request for a refund or download files with important information. However, these are malicious in nature, and may infect your computer with malware or allow a third party to access your computer. If you receive an email that appears to be from the IRS but you did not request any information from the IRS, do not click on any links or open any attachments, and immediately move it to your spam folder. The IRS does not send unsolicited emails requesting personal or financial information.
  • Ghost tax preparers. If you pay a third party to prepare your tax return, that individual must sign the return and include a valid 2020 Preparer Tax Identification Number, or PTIN. If your paid preparer does not have a valid PTIN, refuses to sign your return, and accepts payment only in cash without providing a receipt, they could be a scammer. These ghost tax preparers may promise big refunds or charge a fee based on the percentage of the anticipated refund, but use fictitious information on the tax returns. They may also substitute their own routing and bank account numbers for the taxpayer’s information in order to intercept direct deposit refunds.
  • Identity theft. This is when someone uses your stolen personal information, such as your SSN, to file a tax return claiming a fraudulent refund. You may not discover this has happened until you try to file your return and are prevented from doing so because your SSN has already been used to file one, or you receive a notice from the IRS that some activity has occurred on your account that you did not authorize.

Is it really the IRS calling?

The first thing every taxpayer should be aware of, is that the IRS does not initiate contact with taxpayers by email, text messages, or social media channels to request personal or financial information. According to the IRS, it most often contacts individuals through regular mail delivered by the U.S. Postal Service. There are special circumstances when the IRS will call or come to a home or business, such as when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour a business as part of an audit or during a criminal investigation. However, the IRS will generally have sent several notices by regular mail prior to taking such actions, and the taxpayer has a right to question or appeal the amount owed.

It is also important for taxpayers to know that the IRS does not demand payment using a specific method such as prepaid debit cards, gift cards, or wire transfers. The IRS will instruct you to make payment to the “United States Treasury”, and no other payee. The IRS will not threaten to have you arrested by local police, immigration, or other law enforcement agencies for nonpayment, and the IRS does not have the authority to revoke your driver’s license, business licenses, or immigration status.

An authentic IRS agent making an in-person visit will always present two forms of official credentials called a pocket commission and a HSPD-12 card, which is a government-wide standard form of identification. You have the right to examine and verify these credentials.

Reporting IRS Scams

It is important to report IRS impersonation scams to the authorities so they can collect data about scams to educate the public, investigate wide-spread scams, and implement procedures to defend against such scams.

You can report a phone scam to the Treasury Inspector General for Tax Administration at 800-366-4484 or through their IRS Impersonation Scam Reporting web site.

You can also report phone scams to the Federal Trade Commission through their FTC Complaint Assistant.

If you have received unsolicited email claiming to be from the IRS, report it to the IRS at phishing@irs.gov.

Final words

Remember, we live in a fast-paced world, and are constantly bombarded by information. The best ways to protect yourself from scams, either tax-related or not, are to slow down and pay attention to the communications you receive, educate yourself about current scams, and don’t panic. In most situations, legitimate entities do not resort to threats and pressure tactics to collect on debts that you are unaware of until they threatened you. And if you have elderly friends or relatives, they are especially vulnerable to these types of scams, so please take a few minutes to educate them, as well.