Tax scams strike every tax season, and they are constantly evolving and changing. While most people intuitively recognize most forms of tax scams, it’s still important to be aware of how these thieves are changing their tactics so that you can avoid becoming a victim. Here are some of the newest tax scams that we’re seeing for the 2021 tax season. Make sure you know how to recognize them if they come your way.
Basics of Recognizing Tax Scams
Before we get into the particulars of this year’s scams, we want to first go over some basic ground rules that the IRS follows. Knowing these things can help you to avoid most types of scams:
- The IRS does not initiate contact via email, text message, or social media to request your personal or financial information.
- They will not demand immediate payment using a specific payment method (especially not prepaid debit cards, gift cards, or wire transfers). They will always mail a bill first.
- You will always be given the opportunity to question or appeal the amount you owe, and they will not demand you pay taxes without offering you this opportunity. It is your right as a taxpayer.
- They will never threaten you with action from law enforcement.
- They cannot revoke your driver’s license, your immigration status, or a business license.
The IRS has recently started doing in-person visits to those who owe taxes. If you do get someone at your door claiming to be from the IRS, they should always provide you with two forms of ID—a pocket commission and an HSPD-12 card. HSPD-12 is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. You have the right to see these credentials. And if you would like to verify information on the representative’s HSPD-12 card, the representative will provide you with a dedicated IRS telephone number for verifying the information and confirming their identity.
A Few of the Latest IRS Scams
1. ‘Click here to see some details about your tax refund’ – These emails are intended to trick the reader into clicking on links that lead to a fake IRS-like website and expose the user to malware. The IRS never emails taxpayers about the status of their tax refunds.
2. ‘You need to pay a small fee to get your stimulus check’ – This is a growing scam related to the government’s ongoing response to the coronavirus, the Federal Trade Commission warns. Many Americans will qualify for a stimulus check, but the government (including the IRS) does not require anyone to pay anything to receive the money.
3. ‘We’re calling from the FDIC and we need your bank information’ – The Federal Depository Insurance Corporation insures bank deposits so that consumers won’t lose all of their money if a bank fails. But it does not send unsolicited correspondence asking for money, sensitive personal information, bank account information, credit and debit card numbers, Social Security numbers or passwords. Scammers claiming to be from the FDIC are hunting for information they can use to commit fraud or sell identities.
4. ‘We’re calling to tell you your identity was stolen; you need to buy some gift cards to fix it’ – In this trick, a criminal calls the victim and poses as an IRS agent. The criminal claims the victim’s identity has been stolen and that it was used to open fake bank accounts. The caller then tells the taxpayer to go buy certain gift cards; later, the crook gets back in touch and asks for the gift card access numbers.
5. ‘We’ll cancel your Social Security number’ – In this IRS scam, the criminal contacts the victim and claims that he or she can suspend or cancel the victim’s Social Security number. “If taxpayers receive a call threatening to suspend their SSN for an unpaid tax bill, they should just hang up,” the IRS says.
6. ‘This is the Bureau of Tax Enforcement, and we’re putting a lien or levy on your assets’ – There is no Bureau of Tax Enforcement. Victims often receive a letter from the fake agency claiming that they have a tax lien or tax levy and that they had better pay the “Bureau of Tax Enforcement” or else.
7. ‘If you don’t call us back, you’ll be arrested’ – Criminals can make a caller ID phone number look like it’s coming from anywhere — including from the IRS, the local police or some other intimidating source. But the IRS doesn’t leave prerecorded voicemails, especially ones that claim to be urgent or are threatening. Also, the IRS can’t revoke your driver’s license, business licenses or immigration status.
8. ‘Use this Form W-8BEN to give us personal data’ – Although the Form W-8BEN, which is called a “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding,” is a legitimate IRS form, criminals have been modifying the form to ask for personal information such as mother’s maiden name, passport numbers and PIN numbers. (The real form is here.)
9. ‘We’re from the Taxpayer Advocate Service and we need some information’ – The Taxpayer Advocate Service is a legitimate organization within the IRS that helps people get assistance with IRS problems. But it doesn’t call taxpayers for no reason. Criminals are making phone calls look like they’re coming from the TAS office in Houston or Brooklyn, according to the IRS, and when taxpayers return the calls — which often tell victims they’re entitled to a large tax refund — the criminals ask for personal information such as a Social Security number.
10. ‘Click on this to see your tax transcript’ – In this scam, fraudsters send an email with an attachment they claim is the taxpayer’s tax transcript. (A tax transcript is a summary of a person’s tax return.) Although tax transcripts are a real thing that the IRS provides, the IRS does not email tax transcripts. You can request one directly from the IRS, which it will then mail to you.
11. ‘Take this FBI survey’ – This is a ransomware scheme in which criminals email messages that appear to be from the IRS or FBI. When readers click on a link to a survey that the message claims is required, the link downloads ransomware that prevents users from accessing data on their devices unless they pay off the fraudsters.
12. ‘We don’t need to sign your tax return even though we prepared it’ – Anyone you pay to prepare your tax return must have a valid Preparer Tax Identification Number and must sign your tax return. Reluctance to sign your return is a red flag that the person is a “ghost preparer” who just wants to charge you a fee and split. Click here to read the about additional tax scams and consumer alerts on the IRS website.
Know Who to Contact
Don’t become a victim of these tax scams. Make sure you know how to recognize them upfront, and report any phone calls or emails from scammers.
- Contact the Treasury Inspector General for Tax Administration to report a phone scam. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
- Report phone scams to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.
- Report an unsolicited email claiming to be from the IRS, or an IRS-related component like the Electronic Federal Tax Payment System, to the IRS at email@example.com.
Above all, if you have any questions, do not hesitate to contact your tax advisor.
PKS & Company, P. A. is a full service accounting firm with offices in Salisbury, Ocean City and Lewes that provides traditional accounting services as well as specialized services in the areas of retirement plan audits and administration, medical practice consulting, estate and trust services, fraud and forensic services and payroll services and offers financial planning and investments through PKS Investment Advisors, LLC.
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