Tax season is here and it’s important to protect yourself from scams to avoid a stressful financial situation. Many scammers use this time of year to prey on vulnerable people to try to access their personal information. They may call in the guise of a tax rep saying a payment is overdue, or they may identify themselves as a rep from a charity promising deductions.
Scams have been known to have devastating effects, but knowing what to look out for will help to keep yourself protected from scammers. Learn more about some common tax scams so that you and your loved ones don’t become a victim to a tax scam:
The Gift Card Scam
This scam involves scammers claiming they work for a well-known business or a government agency, such as the IRS. They will say you owe back taxes, or some other sort of payment, and threaten you with a penalty if you don’t pay up. They will then send you to a specific drug store, such as Target, Walgreens, etc., to buy a gift card. They will ask you to provide them with the gift card numbers and pins. Gift cards are a favorite method of payment for scammers because they are easy to turn into cash anonymously.
The phone call scam occurs when someone contacts you pretending to be an IRS agent. They will say you owe taxes and threaten you with arrest if you don’t pay up. They can be very convincing and may even provide a badge number. The idea is to get you to make this ‘payment’ over the phone so they can get your personal information and scam you out of lots of money. It’s important to realize that the IRS will almost never contact you over the phone. And if they do, they won’t ask for your personal information.
Bogus charities are another common tax time scam. They involve scammers calling you seeking a donation to their ‘charity.’ People are more likely to donate to charities at tax time because they know it can get them a deduction. Charity scams are another method scammers use to try and get your personal information. If someone calls you identifying themselves as a charity rep, ask for the organization’s name, web address and mailing address. That way you can confirm if they are real before you consider donating. But typically, charities do not solicit donations by telephone, so beware!
Ghost preparers are scammers that prepare taxes to defraud taxpayers and the IRS. They often also steal their ‘client’s’ personal information making them victims of identity theft. They may refuse to sign your return and instead ask you to sign it and mail it in. Bear in mind that all preparers are required to have a PTIN number which must be included on the return. A ghost preparer may also require payment in cash and refuse to provide you with a receipt. They may falsify your returns and ask you to deposit any refund you receive into their bank account instead of yours.
Learn more about IRS Tax Tips directly from the Internal Revenue Service website.
Do you need assistance with filing your taxes? Contact Volunteer Income Tax Assistance (VITA) for free tax preparation for individuals and households who qualify.