Tax season is nearly here, which means it’s time to gather all your returns, find your receipts, tally up your donations, and figure out all your write-offs from 2019. It’s also time to educate yourself about some of the top tax scams that make the rounds every year.
Unfortunately, there are a lot of unsavory people out there looking to rip you off. During tax time, these people will attempt to steal your identity, drain your bank account, and take your tax refund. No matter who you are, you need to watch out for these tax fraudsters.
Let’s take a look at some of the top tax schemes to be aware of this year and find out how you can protect yourself in 2020 and beyond.
Email and Phone Scams
You may have picked up your phone this year and heard this scary message: “Attention: This is the IRS. Your Social Security number has been stolen. Please stay on the line for a representative.”
Or, you may have received an email from an official-sounding address with “IRS” in the name. The email might warn you about a problem with your tax return and instruct you to click on a link in the email to resolve the issue.
If you receive a phone call or email message like this, you can guarantee it’s a scam. The IRS will only communicate by mail sent on official IRS letterhead, and they will never email you or call you on the phone to tell you about a tax debt or tax issue.
Unfortunately, many people get frightened when they receive an alarming message from someone claiming to be with the IRS. Far too many victims give up their valuable information without doing any double-checking. At that point, the scammer has everything they need to steal the victim’s identity.
If you get a call from the IRS or anyone else who asks for sensitive personal or financial information, hang up right away and block the number. You can also contact the Federal Trade Commission to notify them of the scam and help protect other consumers from these kinds of calls.
And if you get an email from someone claiming they’re with the IRS, send it right to your spam folder. Remember to never click an unknown link or reply to someone you don’t know who is asking for sensitive information.
Phony Tax Preparers
Some fly-by-night “tax return preparers” are nothing more than common criminals who set up shop to try and steal refunds and sensitive information from unsuspecting victims. Many of these shady tax preparers work out of temporary “pop-up shops.”
Watch out for tax preparers who charge a fee based on a percentage of your refund; this is a major red flag that often indicates the tax preparer will try to inflate your refund through fraud. And if your tax preparer says your refund will be deposited in their bank account instead of yours, don’t walk away — run!
Don’t risk your financial security by handing sensitive information to a tax preparer you’ve never heard of before. Instead, choose a well-known national tax preparation service or an established and respected local partner like S.H. Block Tax Services.
Identity theft happens when someone steals sensitive information like your Social Security number, name, address, and banking information and then uses the information to make fraudulent purchases or transactions. Identity theft can happen year-round, but thieves step up their efforts during tax season because they know there are even more opportunities to get the information they want.
- To protect yourself from identity theft during tax season:
- Check your mail regularly and don’t let sensitive financial documents like W-2s sit in your mailbox.
- Identity thieves are dumpster-divers, so don’t throw away intact tax forms and financial documents in the trash or recycling bin.
Make sure you only file taxes online from a secure network that you trust. Also, remember to keep your antivirus software up to date during tax season.
Fake Charitable Causes
A tax deduction for a charitable donation can be a win-win: you donate to a great cause and get a tax benefit in the process. However, not all charities, non-profit organizations, and foundations are legitimate. Scammers set up fake charities specifically to steal money from victims. If you donate to a phony charity and then try to claim a deduction, you could get audited and face penalties even if you had no idea the charity was fake.
Before donating to a charity, search the Tax Exempt Organization list on the IRS’ website to make sure the IRS considers the charity you’re donating to legitimate and tax-exempt. Remember also that GoFundMe and Kickstarter donations are considered personal gifts, so they don’t qualify for an exemption on your tax return.
Contact S.H. Block Tax Services If You’ve Fallen Victim to a Tax Scam
If you’ve fallen victim to a tax scam, don’t panic. Hiding from your tax problems is a surefire way to make them worse. If you need help with a tax issue of any kind, contact the offices of S.H. Block Tax Services right away, either by calling (410) 793-1231 or by filling out our quick and convenient online contact form.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject. Please read our full disclaimer here.
Internal Revenue Service. (2019, March 20). IRS concludes “Dirty Dozen” list of tax scams for 2019: Agency encourages taxpayers to remain vigilant year-round [press release]. Retrieved from https://www.irs.gov/newsroom/irs-concludes-dirty-dozen-list-of-tax-scams-for-2019-agency-encourages-taxpayers-to-remain-vigilant-year-round
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.