When it Comes to Tax Scams, Knowledge is Power

It’s easy for us to think we wouldn’t fall for these types of cons, but strong emotions, such as fear, can drive many people to do things they otherwise wouldn’t. Consider how you might react to:

  • A call from someone claiming to be from the IRS saying you had to pay your tax bill immediately or the local police would be there in 10 minutes to arrest you?
  • Your tax preparer asking you to sign a blank Form 1040 that would be filled in later?
  • An email stating it is from the IRS asking you to click on a link to “verify” information?
  • A text with a link to fill out an application to receive your “delayed” Economic Impact Payment check?

Criminals need victims to believe them, so they try to instill fear and urgency by threatening the victim with arrest if they don’t pay a bogus tax bill immediately. Or, they play on the victim’s trust that they are being helped and that providing their personal and financial information will result in getting a financial benefit or something they are owed. Even the most street smart among us can be tricked by a savvy and unscrupulous miscreant.

Tax Scam

The “Dirty Dozen” Tax Scams

Tax scams occur throughout the year, but peak during filing season as people prepare their returns or hire someone to help with their taxes. Knowing which scams are prevalent can help you avoid becoming a victim. Since 2003, the IRS has issued an annual “Dirty Dozen” list of tax scams based on new and evolving attempts to take advantage of taxpayers. The list helps taxpayers and tax professionals recognize and avoid scams. The 2021 Dirty Dozen list will be issued next week so stay tuned. My work at the IRS has taught me that criminals constantly adapt old scams and create new ones to scare, trick and cheat victims into giving up their money and personal information.

In the original Dirty Dozen list back in 2003, we warned that criminals posing as IRS agents would come to your house and demand money. While it’s true that real IRS agents or officers may, in fact, come to your home, these visits generally happen after you’ve received a bill or been notified several times by mail previously and have not responded. IRS.gov has tips to help you find out if it’s really the IRS calling or knocking on your door. While IRS employees may make unscheduled in-person visits, when doing so, they will always provide two forms of official credentials. And if you would like to verify information on those credentials, they will provide you with a dedicated IRS telephone number for verifying the information and confirming their identity. There have been isolated instances where a taxpayer, believing the IRS officer was a scammer, threatened them with violence. Doing so is a crime. If a taxpayer were in fact interacting with a scammer, the taxpayer should not threaten them with violence either. Instead, the taxpayer should disengage, and report the issue.

Times have changed, and the most recent Dirty Dozen list comprises scams using social media, phone calls and computer attacks. Why the change? Since 2003, the great majority of impersonation scams are done via telephone or online. The internet has made scamming people much easier and more widespread.

What to Look for – Evolving Scams

Oftentimes, criminals find opportunity in adversity. Coronavirus and disaster relief scams are a major focus, as scammers try to collect people’s Economic Impact Payments and take advantage of support for victims of natural disasters.  Last year’s Dirty Dozen list warned taxpayers about scams using keywords such as “coronavirus,” “COVID-19” and “stimulus” in emails, letters, texts and links to fake websites. We also warn about scams that crop up related to natural disasters like hurricanes, floods, snowstorms, and wildfires when criminals set up shop seeking donations to help victims.

Phishing schemes are tried-and-true ways to trick you into clicking on a link or opening an attachment. These emails are designed to look as if they’re from a bank, your boss, a credit card company, an online store, etc. And once a criminal gets your personal information, they can do a variety of things with it, including using that information to file bogus tax returns or claim benefits like unemployment.

We’ve all likely picked up the phone to hear someone on the other end of the line try to get us to divulge personal information. Phone scams often target the elderly, people with limited access to information and immigrants who may prefer communication in their native language. Many of these calls are “robocalls” (a text-to-speech recorded message with instructions for returning the call), but in some cases they are made by a real person. These criminals may have some accurate personal information, making the phone calls seem legitimate.

Once again, it’s important to note that in certain circumstances IRS employees may contact taxpayers by phone. Generally, before receiving such a call from an IRS employee, the taxpayer will have received one or more notices or other correspondence or contacts from IRS regarding the tax matter. True IRS employees will always tell the taxpayer why they are calling, explain the tax matter, and explain the taxpayer’s rights and what recourse is available if the taxpayer disagrees with IRS. True IRS employees will not threaten to have the taxpayer arrested, demand unusual forms of payment, or instruct the individual to make payments payable to an individual or an entity other than the United States Treasury. If you have filed all your returns and don’t owe taxes or have reason to think you do, and you get an unexpected call “from the IRS,” ask the employee how you can verify their identity as an IRS employee. If they can’t, don’t give out any information. Hang up immediately and contact the Treasury Inspector General for Tax Administration to report the call. Use the IRS Impersonation Scam Reporting web page and report the caller ID and/or callback number by sending it to phishing@irs.gov with “IRS Phone Scam” in the Subject line.

A helpful tip: If you owe taxes or think you do, you can view your tax account information online at IRS.gov to see the actual amount owed.

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