Make Tax Season a Little Less Miserable
Tax season is here, and along with the usual paperwork and stress, scammers are out in full force looking to take advantage of unsuspecting taxpayers. As if the process of filing taxes wasn’t challenging enough, criminals are constantly devising new schemes to trick people into scams with devastating consequences.
According to IRS data, tax scams tend to spike early in the year and intensify as the filing deadline approaches. Last year, for example, scammers targeted many business owners by misrepresenting the Employee Retention Credit (ERC). They charged hefty fees to assist with applications, even when the victims didn’t qualify. The problem became so widespread that the IRS established a special ERC withdrawal program for victims who discovered they had unwittingly submitted fraudulent claims.
Common Tax-Time Scams
Tax scams are particularly effective because they prey on taxpayers’ fear of making a mistake and facing trouble with the IRS. Criminals exploit this vulnerability by posing as IRS agents, tax software providers, or even colleagues in financial departments. They send urgent messages demanding payment or requesting sensitive information like Social Security numbers.
Take a moment to learn about some common tax-time scams and how you can protect yourself against them.
1. Phishing and Smishing Scams
Scammers often impersonate the IRS through fake emails (phishing) or text messages (smishing). They promise refunds or threaten legal action, hoping to trick you into clicking on malicious links or sharing personal information. These scams target not only individuals but also tax professionals and businesses, as they hold valuable data.
How to prevent it:
- Never click on links or respond to unsolicited messages claiming to be from the IRS.
- Report suspicious emails to phishing@irs.gov.
- Always verify messages directly with the IRS using official channels.
2. Online Account “Help”
Fraudsters may offer assistance in setting up an IRS online account, aiming to steal your personal tax and financial information. By pretending to be “helpful” third parties, they trick victims into providing Social Security numbers, IDs, and other sensitive details. This information can be used to file fake tax returns and steal refunds.
How to prevent it:
- Create your IRS online account only through IRS.gov.
- Ignore unsolicited offers of third-party assistance. If someone contacts you claiming to help, it’s likely a scam.
3. Fuel Tax Credit Scams
The IRS has issued warnings about scammers promoting Fuel Tax Credit claims. These credits are only available for specific uses, such as off-highway business or farming. Scammers fabricate documents and receipts to support false claims, charging victims large fees while leaving them vulnerable to IRS penalties.
How to prevent it:
- Ensure you’re eligible for the Fuel Tax Credit before claiming it.
- Incorrect claims can result in fines or even criminal charges.
- Consult a qualified tax professional to ensure your claims are legitimate.
If It Sounds Too Good To Be True, It Probably Is
Many of these scams promise significant tax savings that seem almost too good to resist. But remember the age-old adage: if it sounds too good to be true, it probably is. Falling for these schemes can result in legal trouble and hefty fines from the IRS.
This tax season, avoid the pitfalls by sticking to legitimate, proven methods. Stay informed and vigilant to make the process a little less miserable. For more tips on avoiding tax scams, check out the IRS’s Dirty Dozen list, which details common schemes and provides guidance on staying safe.