The IRS recently alerted us to three tax scams that are common year-round, not just during tax season. These activities are illegal but can be difficult to prosecute because the scammer has duped the victim and disappeared before anyone realizes there is a problem.
- Identity Theft – This scam involves obtaining your personal information such as social security number, bank account numbers, credit cards or other data and using them to commit fraud. You are probably familiar with fraudulent charges appearing on credit cards or fraudulent phone charges on cell phone bills. Those are just a couple possible consequences of identity theft. In some cases, people will use a stolen identity to file a fraudulent tax return claiming a refund. When theperson whose identity has been stolen tries to file their legitimate tax return, it is rejected because the fraudster beat them to it. Imagine trying to correct that with the IRS!
- Phishing - This is a very common practice using emails or the telephone to try to obtain personal or financial information in order to then use the information in illegal practices. This is a particularly common practice with the elderly and unfortunately the elderly often are very trusting and fall prey to these scams easily. It is recommended that before giving private information via email or phone, you should be absolutely certain you know who you are dealing with and be sure they legitimately need the information. If you don’t know them, don’t give them any information.
- Preparer Fraud – There are tax preparers out there who will skim a part of the tax payer’s refund for themselves or charge unreasonable fees to prepare the tax return. Others promise refunds that sound terrific but once the return is completed, the refund does not materialize. Fortunately, these dishonest preparers are in the minority but you still need to be alert if you are seeking a new tax professional.
If you have any questions about any of these scams or think you may have been a victim of a scam, give us a call at 916-576-7050