Five Tips for Avoiding Tax Scams

Tax season is upon us, which means spring is around the corner. It’s the time of the year to look forward to warmer weather and tax refunds - but beware - tax season is also scam season.

The IRS has reported a rise in tax cons—like phishing and phone scams—in recent years, but the following tips can help you avoid becoming a victim:

Spot phone scams

Phone-based scams are common. A caller claims to be with the IRS and demands immediate tax payment—often via credit card or wire transfer. They may threaten to send authorities to the call recipient’s home. Other possible threats include suspending a driver’s license or business license. These callers can get quite hostile.

Actual IRS representatives will never demand payment over the phone or threaten to send the police. A real representative will be able to inform you of your rights as a taxpayer, which includes the right to question your bill and receive a clear explanation of what you owe.

Don’t pay fake taxes

Some scammers contact taxpayers to demand payment for “taxes” like the “Federal Student Tax.” Never heard of it? That’s because it doesn’t exist.

The IRS recommends hanging up on anyone you think could be a scammer and reporting the activity to the IRS via the web or by calling 800-366-4484. Don’t engage. The threats and arguments of skilled scammers can seem convincing.

Don’t wait

The IRS does not necessarily alert you when your return has been filed, which could put you in a bind if you wait until the last minute to do your taxes and find out that someone has already filed on your behalf. Scammers can target your employer the same way they target your personal finances. If a criminal gains access to your W-2 through your employer, they can file your tax returns pretending to be you, and you may not know about it for weeks or months. The longer you wait, the bigger the window is for scammers to carry out this fraud. Take control and file your taxes as soon as possible. 

Verify charities

Charitable donations are tax deductible, right? Yes, but the donations have to be to real charities. Scammers will solicit donations for fake charities and tell you the donations are deductible. If you’re not sure about an organization, you can look it up online.

Shun phishing emails

Phishing emails attempt to trick people into divulging personal information or sending money. Here’s how it works: you receive an email that says it’s from the IRS, and it asks you to follow a link to provide some type of information. It may tell you to provide additional information to receive a refund or it may demand immediate payment for a tax bill. Phishing emails can look quite legitimate and not arouse suspicion at first glance.

As a rule of thumb, treat any email asking for sensitive information as suspicious whether the email seems to be from the IRS, a financial institution, or a service provider like your cable company. The IRS will never send an email asking you to provide personal information via a link. Avoid opening a suspicious email or any attachments from questionable senders—the attachments could contain malware.

First Tech has plenty more tips on how to stay safe online, visit our Member Security Program to learn how to keep your money and your identity secure.