Avoid Tax Scams With These Tips

February 28, 2017

LOS ANGELES & SAN JOSE—It’s tax season, and you’ve probably been subjected to a barrage of tax-related messaging. Some of it may be from the IRS and legitimate tax preparers, but some of it certainly isn’t. It can be hard to sort out what to believe and whom to trust.

Maybe you got a call from the IRS and they said you owe money and need to pay promptly to avoid arrest. Or maybe you’ve been promised a huge tax refund by a tax preparer. If it sounds too good to be true or deceiving, it probably is. Tax scams were BBB’s #1 scam in 2015 and 2016 and they peak during tax season.

This time of year fraudsters are out to get your personal and financial information. Follow these tips from your BBB to avoid tax scams:

  • The IRS won’t call you demanding immediate payment.
    • Last year consumers nationwide reported nearly 8,000 tax scams to BBB Scam Tracker.
    • Sophisticated scammers call taxpayers claiming to be from the IRS. They’ll often spoof your caller ID to seem more convincing. They’ll demand payment, usually through a prepaid debit card or wire transfer, or claim you have a refund waiting and need your personal information.
    • But The IRS does not ask for credit or debit card numbers over the phone, and there’s no such thing as a “Federal Student Tax.” If you get one of these calls, hang up!
  • The IRS doesn’t communicate through email.
    • Another popular tax scam involves email phishing. There was a 400% increase in these incidents in the 2016 season. Additionally, consumers reported more than 1,200 phishing scams to BBB Scam Tracker in 2016.
    • Scammers may try to access your personal and financial information by sending you emails from the “IRS.” The emails may contain attachments that carry malware or spyware, so be careful. They may also encourage you to click on links taking you to bogus websites imitating IRS.gov that ask for personal information, Social Security Numbers and financial information.
    • If you get one of these emails, delete it! Don’t open any attachments or click on any links, and report it to the IRS by forwarding it to phishing@irs.gov.
  • Be wary of tax ID theft.
    • Tax ID theft usually happens when your identity has already been compromised and is used to file false tax returns. This could happen if the payroll or HR department where you work is hit by a W-2 email phishing scam.
    • When you try to file tax returns, the IRS rejects your return because another return using your SSN has already been filed. You may also get an IRS notice stating that you’ve received wages from somewhere you never worked, or receive other notices that don’t apply to you.
    • If you’re a victim of tax ID theft, continue to pay your taxes and file your return, even if you must do so by paper. Visit identitytheft.gov to file a complaint and learn what to do next.
  • Don’t believe “too-good-to-be-true” propositions.
    • Watch out for official-looking communications claiming to reduce your tax liability or get you a larger-than-life refund. Not all "tax preparers” are created equal and some are outright fraudsters.
    • Be wary of any tax preparer who claims they can get you a larger return than other preparers, who bases their fees on a percentage of your refund, who asks you to sign a blank tax form or who refuses to provide you a copy of your completed return. Always do your research and be careful who you deal with, who’s getting your personal or financial information and what’s being done on your behalf.
    • Your tax preparer should be a certified public accountant, a tax attorney, an enrolled agent or a certified E-file provider, and they should have a Preparer Tax Identification Number (PTIN). You can find a list of trustworthy Accredited Businesses that can prepare your taxes on bbb.org.
  • Practice smart cybersecurity.
    • Make sure the website you’re using is legitimate and secure. Look for the “https:” as well as other trust marks and a privacy policy. Make sure your computer’s anti-virus, anti-spyware and anti-malware software is current and running. If you’re filing online, only file from secure computers. Never use public Wi-Fi to file your return.
    • Look up every tax website you use at bbb.org to see its BBB Business Profile, which includes a rating, complaint history and reviews from past customers.

If you’ve been affected by a tax scam, make sure to report it to BBB Scam Tracker at bbb.org/scamtracker to help warn others. For more tax resources, check out IRS.gov