Fraud impacts many areas of our lives, and unfortunately, taxes are no exception. Read on to learn common warning signs of tax fraud and what to do if you’re a victim.
Warning Signs of Tax Fraud
Tax fraud can take form in a few different ways. Here are some of the most common signs that something is awry.
- When you file your taxes, your return is rejected because one has already been filed. If a fraudster has compromised your information, they can file taxes in your name without you knowing. They may enter inaccurate information and have a refund sent to their own bank account, which they will likely close after withdrawing the funds.
- You receive a tax refund you weren’t expecting. Maybe you didn’t file your taxes yet. Or maybe you weren’t expecting a refund at all. Either way, if a tax refund you weren’t anticipating appears in your bank account via direct deposit or as a check in the mail, it’s a sign that a fraudster has filed taxes in your name and likely forgot to change the address or account information before they submitted them.
- You get a threatening call from someone claiming to be an IRS representative. Most often, the IRS contacts taxpayers through regular mail delivered by the USPS. While there are some circumstances which may warrant a phone call or visit from the IRS, the department states that, “taxpayers will generally first receive several letters (called “notices” from the IRS in the mail.”
Even if the IRS contacts you via phone, they will not:
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- Demand immediate payment using a payment method such as a prepaid debit card, gift card, or wire transfer.
- Threaten immediate arrest.
- Demand taxes be paid without the ability for the taxpayer to question or appeal.
- Your tax return preparer refuses to sign as the paid preparer. Known as ghost tax return preparers, these scammers may charge you to prepare your return, but refuse to sign it and provide their Preparer Tax Identification Number. They’re often looking to make quick money by charging you more with the promise of getting you a larger return. Red flags include:
- Requiring payment in cash only.
- Not providing a receipt of payment.
- Inventing income or claiming fake deductions on your behalf.
- Directing refunds into their own bank account, rather than the taxpayer’s.
- You receive an email or text message encouraging urgent action. Some con artists will send an email or text message urging you to “update your IRS e-file immediately.” These messages may link to copycat websites designed to look like the official IRS site and will likely ask you to enter personal or financial information. They may also have malware that infects your computer and allows criminals to access your files or track your keystrokes.
What to Do If You’re a Victim of Tax Fraud
The actions you need to take will vary based on what type of fraud you’re facing and what information, if any, you’ve provided to the fraudsters.
- If you receive an unsolicited email claiming to be from the IRS, report it to phishing@irs.gov.
- If you receive a phone call impersonating the IRS:
- Hang up immediately.
- Write down the number.
- Report the call to the Treasury Inspector General for Tax Administration.
- Report the number to phishing@irs.gov and put “IRS Phone Scam” in the subject line.
- If you suspect a tax preparer of misconduct, report it to the IRS.
- If you know or suspect that you’re a victim of tax-related identity theft (i.e., someone has filed a fraudulent return in your name), follow these recommendations from the IRS.
- If you’ve provided financial information to a fraudster:
- Contact your financial institution immediately for assistance.
Stay Alert of Trending Scams
When tax season is over, inevitably another cycle of new scams will begin. To stay on top of what’s happening and learn how to protect yourself and your finances, visit the security section of our blog.
