Tax season is a hectic time for responsible Americans.
There’s paperwork to collect and fill out, jargon to parse, and hopefully, a sizable return as your reward for all the trouble.
It’s also a time of year plagued by spikes in phishing emails, fake phone calls, and other activities scammers use to steal your sensitive information and hard-earned money.
This article delves into the shady world of tax scams.
Reading on will introduce you to the most common types of tax scams, how to recognize them, and what you can do to stay safe.
What Are the Most Common Tax Scams?
Tax scams fall into two broad categories, depending on the end goal. Some scammers want access to sensitive information like your social security number.
This lets them steal your identity, take out loans, and damage your finances and reputation in various ways.
Others want to trick you into settling non-existent tax debt, often through unconventional means.
Most scams start by contacting you via phone, email, or social media.
The other party will claim to be the IRS or the representative of some important-sounding but fake organization responsible for settling tax matters.
They’ll claim you owe more taxes than you thought you did or mention some similar problem you need to settle urgently.
If you don’t, they’ll threaten you with severe consequences and pressure you to pay immediately.
Gift cards, wire transfers, and cryptocurrency are their preferred payment methods, which should already raise alarm bells.
Other scammers take different approaches. Some may claim to represent charities and will coax you into donating, citing it as a worthy cause and a deductible.
Others pretend to be tax preparation specialists who can file taxes at low rates and guarantee higher returns than normal.
Regular citizens aren’t the scammers’ only targets.
HR departments are at high risk since they store employees’ personal and tax information, which some scammers try to access by posing as higher-ups in convincing phishing emails.
There’s also been a recent surge in elaborate spear phishing attacks targeting tax professionals.
In these, scammers impersonate new clients and send links that download malware or redirect the recipient to fake data harvesting sites when clicked.
How to Identify Tax Scams?
Fortunately, identifying most tax scams is straightforward if you know how the IRS operates.
The most important thing to remember is that the IRS sends initial inquiries and notices via physical mail using the USPS.
Any unexpected emails, texts, or phone calls from someone claiming to be the IRS are almost certainly fraudulent.
The IRS will never pressure you to pay outstanding bills right away or threaten you with consequences.
Any legitimate representative should be able to explain in detail what you owe.
You also have the right to challenge any outstanding tax claim and hire representation to help you present a case to the proper authorities.
Asking for your personal information is another red flag.
The real IRS already knows your SSN and should have up-to-date information on details like your name and home address.
Moreover, you may only pay taxes in US dollars using approved means.
These do NOT include wire transfers, cryptocurrency, gift cards, or payment using third-party apps.
How to Protect Yourself from Tax Scams?
Staying safe during tax season and beyond requires vigilance, common sense, and a two-pronged approach.
On the one hand, you’ll want to minimize the chance of scammers reaching out to you in the first place.
On the other, you should know how to recognize and deal with their attempts.
You can safeguard information tied to your online accounts through a password manager that’s compatible with your device
It’s convenient and versatile since you get complex password generation, encrypted storage, and easy access from any device.
Password managers also offer two-factor authentication to enhance account security further.
If someone already has your SSN, they may file a report instead of you and reap the returns.
People tend to put off filing their taxes until the last minute; do yours early instead.
You should also contact the IRS and have them send you an IP pin.
This six-digit code is similar to conventional 2FA and prevents scammers from filing tax returns in your name.
How and where you access sensitive financial information is important as well.
Public Wi-Fi is especially dangerous since someone can easily create a fake version or intercept communication between you and a website, even if the site itself is secure.
Avoid conducting financial transactions on such networks and use a VPN to encrypt your connection, which makes it impossible to track your online whereabouts or extract any inputs you enter.
If you are looking for a reliable one, check Reddit’s famous best VPN list.
If you do get contacted by scammers, the safest option is not to engage with them.
Never click on links inside suspicious emails or give your personal information to anyone.
Always reach out to the IRS through the channels provided on their website, and don’t hesitate to report sketchy behavior to their fraud department.
Conclusion
Doing your taxes is stressful enough as it is, and scammers will gladly take advantage of your frustration and lack of specialized knowledge for financial gain.
Now that you know how they operate, you’re far less likely to become yet another victim.
Leave a Reply