IRS Imposters Steal Millions a Year, and They’re Getting More Sophisticated. Here’s How to Spot the Scams.

IRS Imposters Steal Millions a Year, and They’re Getting More Sophisticated. Here’s How to Spot the Scams.

by | Accounting News, Fraud, IRS, News, Newsletter

In recent years, IRS imposters have become increasingly adept at deceiving taxpayers, resulting in nearly $5 million in losses, according to the Federal Trade Commission (FTC). These scammers are honing their tactics and targeting vulnerable people, making it crucial for everyone to stay vigilant. Here’s what you need to know to protect yourself from becoming a victim.

The Latest Scam: IRS Impostor Calls

One of the latest and most concerning IRS scams involves callers who claim to be from the IRS and insist that the victim owes back taxes. These fraudsters often use advanced tactics to sound convincing. They might have access to personal information, making their threats seem more credible. Here’s how this scam typically works:

  1. The Call: The scammer will call, claiming to be from the IRS, and assert that the victim owes back taxes. The scammer’s name and credentials will be fake.
  2. The Threat: They pressure the victim to pay immediately, often using threats of arrest or legal action if payment is not made.
  3. The Payment Request: Payment is demanded through untraceable methods such as wire transfers or gift cards, which are difficult to recover once sent.

Who Are the Scammers Targeting?

Scam artists often prey on specific groups who may be less aware of IRS procedures or more susceptible to high-pressure tactics. Typical targets include:

  • Elderly Individuals: Seniors are frequently targeted due to potential isolation and lack of familiarity with modern technology.
  • Hearing or Vision Impaired: Those with sensory impairments may struggle to verify the legitimacy of communications.
  • People with Cognitive Issues: Cognitive impairments can make it difficult to discern legitimate communications from fraudulent ones.
  • Individuals Not Fluent in English: Individuals who speak English as a second language might find it more difficult to understand IRS protocols and detect scam indicators.

How to Protect Yourself

To safeguard against IRS impostor scams, follow these tips:

  • Understand IRS Procedures: The IRS will never demand payment via phone call or require payment through gift cards or wire transfers. When issues arise, their first contact with taxpayers is typically through official correspondence via mail.
  • Verify Caller Identity: If you receive a call claiming to be from the IRS, hang up and contact the IRS directly using their official phone number, which you can find on their website. This will help you confirm whether the call was legitimate.
  • Do Not Share Personal Information: Be cautious about providing any personal or financial information over the phone. Legitimate IRS representatives will never ask for sensitive details through unsolicited calls.
  • Report Suspicious Activity: If you believe you’ve been targeted by a scammer, report it to the Federal Trade Commission (FTC) and the IRS. The FTC’s website offers a place to report such incidents and can help authorities track down fraudsters.
  • Educate Vulnerable Individuals: If you know someone who fits the typical profile of scam victims, such as an elderly family member, make sure they are aware of these scams and know how to verify any communication they receive.

The Best Way to Address Back Taxes

If you genuinely owe back taxes, it’s crucial to handle the situation properly:

  • Do Not Use Untraceable Methods: Avoid paying with gift cards or wire transfers. The IRS accepts payments through their secure online payment portal or by check.
  • Seek Professional Advice: Consult a tax professional if you’re unsure about your tax situation. They can provide guidance on resolving tax debts and navigating the complexities of tax law.
  • Set Up Payment Plans: The IRS offers payment plans for those who cannot pay their taxes in full. Contact them directly to discuss your options and set up a manageable payment plan.

Staying informed and cautious is your best defense against IRS impostor scams. Understanding how these scammers operate and knowing the proper channels for addressing tax issues can protect you and others from falling victim to these sophisticated frauds.

 

How to Prevent Tax Identity Theft

How to Prevent Tax Identity Theft

by | Accounting News, Fraud, IRS, News, Online Payment, Professional Services, Resources, Tax, Tax Planning - Individual, Tax Preparation - Individual, Technology

The start of a new year is a time for fresh starts and new goals, but it’s also the beginning of the oft-dreaded tax season, which means Tax identity thieves are on the lookout for information they can use in order to create fraudulent tax returns. Here are some tips to help protect yourself from tax identity theft during tax season.

File Early to Prevent Tax Identity Theft

Tax-related identity theft most commonly occurs from February to early March because thieves want to beat real taxpayers to the punch by filing fraudulent returns before legitimate ones. Because the IRS allows only one tax return per Social Security number per year, your best defense against identity theft is to file your taxes as early as possible.

Use E-File Instead of Postal Mail

An e-filed tax return arrives instantly at the IRS, which then sends back an acknowledgement receipt. At this point you’ll be notified if there’s any suspicious activity, such as possible identity theft. The quicker you know, the quicker you can deal with it. Before you e-file, however, be sure that your firewall, antivirus, and anti-spyware software are all up to date. If you do send your tax return in by post, think about taking it directly to the post office rather than letting it sit in your mailbox.

Don’t Fall for Scams

The IRS will not contact you by phone, email, or text to ask for personal or financial information. Never give out your Social Security number, passwords, PINs, and credit card or bank information to someone who reaches out via these channels. Official correspondence from the IRS is issued in the form of a letter and sent through the mail. However, scammers are getting increasingly clever, and sometimes phony links can look just like the real IRS website. If you ever have questions about the legitimacy of an IRS related query, your best bet is to call the IRS at 800-829-1040.

Protect Your Financial Accounts

Start by using a different password for each of your financial accounts, preferably one that combines letters, numbers, and special characters. It’s also wise to use a two-factor authentication when available, which requires you to verify your login—typically a code sent via call or text.

How to Report Tax Identity Theft

If you’re a victim of tax-related identity theft, you’ll find out when you try to file your return and learn that a return has already been filed with your Social Security number, or you’ll receive a letter from the IRS stating that a suspicious return using your Social Security number has been identified. If either of these happen, you should do the following:

  • Complete a paper return. As shocking as it is to learn that you’ve been the target of identity theft, you still need to file your tax return. In order to avoid tax penalties or late fees, submit a paper return by the filing deadline.
  • Go to IdentityTheft.gov to file a report with the FTC and IRS.
  • File an Identity Theft Affidavit (Form 14039). Fill out and attach this form to your paper return. It will make its way to the Identity Theft Victim Assistance Organization, which will work on your case. Be prepared to submit various forms of documentation proving your identity.
  • Contact the three major credit bureaus—Equifax, Experian, and TransUnion—and ask them to place a fraud alert on your credit records. You should also consider asking them to freeze your credit in case the thief should try to open new credit accounts in your name.
  • Request a copy of the fraudulent return via Form 4506-F. Seeing the fraudulent return will help you determine the specifics of the theft, such as what family information has been compromised.
  • As a precaution, delete any stored credit card numbers from shopping sites and change saved passwords to online accounts.

 

If you have questions on tax identity theft or would like to discuss your 2019 tax return, please feel free to email me at [email protected] or call 317.549.3091.