The first step in fighting back is understanding. Understanding the types of IRS scams being used by criminals will allow you the ability to know when to simply ignore the message or when to hang up the phone. Although these criminals change their approach constantly, there are five major scams you should be aware of. Phone scams, Phishing scams, Fake charities, Identity theft, and Erroneous Refunds or Calls to Return Money to a Collection Agency are at the core of this criminal scam epidemic. As we inspect each of these scams you will gain the knowledge to quickly assess the request before surrendering any vital information.
Aggressive and threatening phone calls by criminals impersonating IRS agents are a major threat to taxpayers. The scammers make unsolicited calls claiming to be IRS officials and demand that the victim pay a fake tax bill by sending cash, usually through wire transfers or prepaid debit cards. Many times, they use threats to intimidate and bully a victim into paying by threatening to arrest, deport or revoke the taxpayer’s driver’s license if they don’t get the money. It is important for taxpayers to realize that if you get a call from someone claiming to be an IRS official demanding payment, do not give them any personal information or agree to send funds to them. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
II. Phishing Scams
Taxpayers should watch out for fake e-mails or websites looking to steal personal information. In these e-mail schemes, criminals can send mass e-mails under an organization’s name, such as the IRS. Criminals can also create websites that appear legitimate but are actually fake. The scammers are hoping victims will provide money, passwords, Social Security numbers and other information that can lead to identity theft.
These e-mail messages and links to the IRS website can look very official and fool even the most cautious person. They can also infect a taxpayer’s computer with malware without the user knowing it. The malware can give the criminal access to the device by enabling them access to the user’s personal files and track keyboard strokes, exposing login information. It is important to realize that the Internal Revenue Service will never initiate contact with taxpayers via e-mail about a bill or a refund. Do not click on any links in these suspicious e-mails.
III. Fake Charities
Fraudulent charities can be a problem throughout the year, but the taxpayer may not realize they have been scammed until they file their taxes. If a taxpayer is audited for deducting donations to a charity that isn’t an actual charity, the IRS may assess more taxes and a penalty.
Taxpayers should be wary of charities with names that are similar to familiar or nationally known organizations. Some fake charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible. Legitimate charities will provide their Employer Identification Numbers (EIN), if requested, which can be used to verify their legitimacy through EO Select check.
If a charity says it needs your Social Security number to take your donation, do not give them any of your personal information. No charity needs that information and it’s likely a ploy to steal your identity.
IV. Identity Theft
Tax-related identity theft occurs when someone uses a stolen Social Security number or Individual Taxpayer Identification Number (ITIN) to file a tax return claiming a fraudulent refund. Meanwhile, the IRS rejects your actual return because it thinks you already filed.
In order to prevent this from happening, guard your social security number and other personal information closely and file a return as soon as you have all your information ready.
V. Erroneous Refunds or Calls to Return Money to a Collection Agency
This scam is related to the Identity Theft Scam previously mentioned but with a new twist. After the criminal steals a taxpayer’s Social Security number and personal information to file a tax return, they use the taxpayers’ real bank accounts for the deposit.
In one version of this scam, criminals pose as debt collection agency officials acting on behalf of the IRS by contacting the taxpayers to say a refund was deposited in error and asking the taxpayers to forward the money to their collection agency.
In another version, the taxpayer who received the erroneous refund gets an automated call stating it is the IRS calling and threatens the taxpayer with criminal fraud charges, an arrest warrant and/or a “blacklisting” of their Social Security number. The recording gives the taxpayer a case number and a telephone number to call to return the refund.
Taxpayers who receive erroneous refunds should follow the steps outlined by Tax Topic Number 161 – Returning an Erroneous Refund. Tax return preparers should also be contacted immediately for assistance in this matter. The IRS also encourages taxpayers to discuss the issue with their financial institutions because there may be a need to close bank accounts.