If you get involved in illegal tax scams, you can lose money or face stiff penalties, interest, and even criminal prosecution. Remember, if it sounds too good to be true, it probably is. Be on the lookout for these scams:
Threatening phone calls by criminals impersonating IRS agents remain an ongoing threat. The IRS has seen a surge of these phone scams in recent years as scam artists threaten taxpayers with police arrest, deportation, license revocation, and more. These con artists often demand payment of back taxes on a prepaid debit card or by immediate wire transfer. Be alert to con artists impersonating IRS agents and demanding payment.
Phishing scams typically use unsolicited emails or fake websites that appear legitimate but are attempting to steal your personal information. The IRS will not send you an email about a bill or tax refund out of the blue. Don’t click on strange emails and websites that may be scams to steal your personal information.
Return Preparer Fraud
About 60 percent of taxpayers use tax professionals to prepare their returns. While most tax professionals provide honest, high-quality service, there are some dishonest ones who set up shop each filing season to perpetrate refund fraud, identity theft, and other scams. Be on the lookout for unscrupulous tax return preparers.
Inflated Refund Claims
Be on the lookout for anyone promising inflated tax refunds. Also be wary of anyone who asks you to sign a blank return, promises a big refund before looking at your tax records, or charges fees based on a percentage of the refund. Scam artists use flyers, advertisements, phony store fronts and word-of-mouth via trusted community groups to find victims.
Be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. If you are making a charitable contribution, you should take a few extra minutes to ensure your hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools you need to check out the status of charitable organizations. Be wary of charities with names that are similar to familiar or nationally known organizations.
On 2/27/16, the IRS announced that their data-base had been hacked and that the personal information of 720,000 taxpayers had been compromised. They further stated that they would be communicating directly with all of those taxpayers.
If you should get that letter from the IRS, act upon their recommendations immediately.
Howard Lipset, CPA
Progressive Management, Inc.