Thieves and con artists want your sensitive information, and tax time is the perfect time to get it. An alert viewer contacted the Consumer Watchdog Facebook page so we could alert you about one of these ripoffs. You can do the same if you see something.
A caller with a foreign accent is leaving messages on local phone numbers telling you or your attorney to call the IRS immediately. The IRS said these phone calls are constantly changing, but sometimes the caller threatens arrest, tells you you owe money, or are owed a huge refund.
The IRS said the thieves want you to call back so they can steal your money or identity. The calls are so sophisticated they may even have the last four digits of your Social Security number or they may fake or spoof the IRS toll free number so it appears the IRS is calling.
Instead of answering questions, hang up and call the IRS yourself.
This is just one of a dozen schemes you need to watch for this tax season. Here’s a look at the others.
Thieves are using personal information like your name and Social Security number, without your permission, to file a tax return and claim a refund. You should file early to make sure the thieves don’t get access to your refund.
Fake emails that ask for sensitive information or that ask you to click on a malicious link to lure you into providing sensitive information which can later be used for identity theft. If you get an email that is phishing for information, send it to the IRS: firstname.lastname@example.org
False promises of free money or inflated refunds
If you are promised a large federal tax refund, be suspicious. The IRS said scammers sometimes pose as tax preparers. They use flyers, advertisements, and phony store fronts to lure in victims. Low-income individuals and the elderly are most vulnerable.
You are ultimately responsible for what’s on your return even if someone else prepared it. You can be penalized for filing a return with false claims.
Return preparer fraud
Before you hire a tax preparer to help you file your taxes, as 60-percent of taxpayers will do this year, make sure you research the company and feel comfortable with them since you will be handing over sensitive information. Only use preparers who sign the returns and enter their IRS Preparer Tax Identification Number (PTIN).
Hiding income offshore
Some individuals hide their income offshore to evade paying taxes. The IRS said there are legitimate reasons to have an international financial account, but there are also reporting requirements that must be followed.
Impersonating charitable groups
Make sure you research the charity before you give a donation. Be leery of phone call solicitations. You can always check the Better Business Bureau Wise Giving Alliance, Charity Navigator, and Guidestar to make sure you are dealing with a legitimate charity. The IRS also has a Select Check feature to make sure the gift you give is tax-deductible.
False income, expenses, or exemptions
Be leery of someone who tells you to inflate your income either as wages or self-employment income to maximize credits.
The IRS warns against making an unreasonable and outlandish claim to avoid paying taxes.
False claiming zero wages or using false form 1099
The IRS said some people file a phony information return as a way to lower the amount of tax owed. A Form 4852 might be used or corrected Form 1099. Be leery of people who encourage you to claim deductions or credits which you are not entitled to claim.
Abusive tax structures
This is a way to hide income in a complex and multi-layer transaction. The IRS said the red flags of this are promises that you can eliminate or substantially reduce your tax liability.
Misuse of trusts
The IRS said unscrupulous promoters urge taxpayers to transfer large amounts of assets into thrusts. This may be cash, investments, and on-going business. There are legitimate uses of trust in tax and estate planning, but the IRS looks for questionable transactions.