Early spring is a wonderful time for tax scammers — the weather gets warmer, flowers start blooming and there’s a fresh crop of taxpayers to prey on. Tax scammers come up with all sorts of way to stalk their targets. Here are a few schemes on the IRS’ radar.
How it works: “Folks get a call either on their home phone or cell phone from someone claiming to be an inspector with the Internal Revenue Service, claiming that they have past-due taxes and that if they aren’t paid immediately, then they’re going to send someone out to arrest you at your home,” says Jonathan Blanton, chief of the consumer protection section at the Office of the Ohio Attorney General. Blanton’s office is one of many law enforcement agencies chasing tax scammers.
To add an air of legitimacy, often the criminals use “spoofing” technology to make the calls look like they’re coming from the Washington, D.C., area, he says. Often the callers want to be paid with iTunes cards, money orders or prepaid debit cards.
How to avoid it: “This is a crime of opportunity, so the best thing you can do to protect yourself is to take away the opportunity,” J. Russell George, the Treasury Inspector General for Tax Administration, said in a recent consumer alert. “If someone unexpectedly calls claiming to be from the IRS and uses threatening language if you do not pay immediately, that is a sign that it is not the IRS calling, and your cue to hang up.”
How it works: “Someone will file a fraudulent tax return on your behalf, having obtained your personal identifying information through a data breach or through some sort of phishing, either online or via telephone, and will file a tax return claiming all sorts of benefits and deductions that you’re not entitled to,” Blanton says. The idea is to make up numbers on the return in order to inflate the refund and then steal the refund. When you file your real return, the IRS thinks you already filed and presses pause on everything (including your true refund, if you had one coming).
How to avoid it: Get there first. File your tax return as soon as possible so you can beat the criminals to the punch. Blanton says it’s also important to check your credit reports at annualcreditreport.com for signs of identity theft, given that the recent Equifax breach exposed Social Security numbers and other information that could be handy for filing fake returns.
How it works: Criminals hack into your tax preparer’s system, take your information, file a fake tax return in your name and then put the resulting refund in your bank account. Then they call you, pose as a debt collection agent, tell you the money was deposited in error and tell you to forward the money to their “collection agency.” They may threaten to file charges, have you arrested or “blacklist” your Social Security number if you don’t give the money back.
How to avoid it: There’s little you can do to prevent this, but if it happens, call the bank to report the suspicious activity and have it return the stolen money to the IRS. Then call your tax preparer right away. If you got a paper check in the mail, don’t cash it — go to the IRS website for instructions. You don’t get to keep the money — it’s been stolen from the IRS.
How it works: A popular version of this apparently targets Hotmail users. According to the IRS, the phishing email subject line reads: “Internal Revenue Service Email No. XXXX | We’re processing your request soon | TXXXXXX-XXXXXXXX.” The email takes you to a fake Microsoft page and then asks for personal and financial information.
How to avoid it: Forward the email to email@example.com and then delete it. The IRS says it generally doesn’t initiate contact with taxpayers by email to request personal or financial information.
How it works: This is an oldie but a goody. You get a call from someone claiming to be with the IRS, your state’s revenue department or a tax company. The impersonator says you haven’t paid your “federal student tax” and that if you don’t pay up immediately, they’ll call the cops. Some scammers vary the threat, claiming you’ll get deported or your driver’s license will be revoked if you don’t pay.
How to avoid it: There is no “federal student tax.” Hang up.
Report it, Blanton says.
“We only know what gets reported,” Blanton says. “A single tip from an individual might not seem all that important, but it could be the difference in making or breaking an investigation and taking some bad guys off the streets.”
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