Tax Refund Scams: 3 Schemes to Look for and How to Avoid Them
For one thing, the IRS would not insult you over the phone.
It’s tax season and scams are afoot. Because filing tax returns can be such an arduous, confusing process, it’s the perfect opportunity for criminals to take advantage of unsuspecting taxpayers. Here are three tactics scammers use to steal personal information and money, according to the IRS. The more you know, the less likely you’ll get scammed.
Fake IRS Phone Calls
The scheme: Scammers often target taxpayers by calling them and pretending to be IRS agents. They use fake names and fictitious IRS badge numbers, and often modify their caller ID so the incoming phone call appears to be coming from the IRS. Then they cajole targets into offering up personal information or sending payments to cover debt supposedly owed to the IRS.
How to spot it: If someone claiming to be an IRS agent demands an immediate payment, asks for sensitive personal information, threatens you with law enforcement, or repeatedly insults you, it’s a scammer. The IRS will never do any of those things.
What to do if you’re a victim: If you receive a call from someone falsely claiming to be an IRS representative, hang up immediately. If you already made a payment or relayed personal information, report the scam to the Treasury Inspector General for Tax Administration and the Federal Trade Commission.
“Mistake” Direct Deposits
The scheme: Criminals steal private client information from tax professionals and then use that information to file for tax returns on a taxpayer’s behalf. They arrange for the tax return to be direct deposited into the taxpayer’s bank account, and then employ a variety of tactics to procure the funds. Generally, a scammer will call a target after the deposit has been made, informing them that it was a mistake, and asking them to forward the payment to a collections agency.
How to spot it: If you get a refund deposited into your bank account (or delivered in the mail) before filing your taxes, then someone illegally filed tax returns on your behalf.
What to do if you’re a victim: Don’t spend the money. Don’t forward it to a collections agency. Immediately notify the IRS and your bank about the situation and ask your bank to return the money to the IRS on your behalf.
Fraudulent Insurance Forms
The scheme: Criminals can fool tax professionals into giving up their email credentials through phishing scams. Then, using a tax professional’s email account, they send fraudulent IRS forms concerning life insurance policies to a tax professional’s clients. If the form is filled out and returned, the criminal will be able to access a taxpayer’s insurance accounts, and take out a loan or withdrawal.
Warning sign: The scammer will ask victims to return the fraudulent form to an email slightly different than the tax professional’s, in order to avoid alerting them of the scam. Always check the email address.
What to do if you’re a victim: If you received a fraudulent form but didn’t return it, forward the email to the IRS at firstname.lastname@example.org. If you filled out and returned a fraudulent form, contact your insurance company to let them know about the fraud.
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