Have you made any New Year’s resolutions this year? Maybe you’re planning to go on a diet, join a gym or read more. Getting healthy and bettering yourself are very noble goals. However, another proactive resolution you should invest in for 2016 is to avoid tax scams. Con artists and scammers have gotten very sophisticated over the years, and they have plenty of weapons in their arsenal. Here are some of the tax scams to watch out for in the coming year:
The False Tax Filing Scam
Identity theft stories are always popping up in the news. Typically, these would involve major security breaches at places like Target or Home Depot. You’re told your information might have been hacked, but you don’t really know what happened to that information. One way a thief can make money from your stolen identity is by filing a false tax return in your name. These savvy crooks can generate bogus pay information to make it look like you’re due a refund. Thanks to quick online filing, that thief can make off with that refund before you ever get around to filing your legitimate return.
Filing false tax claims has become such a big issue that the IRS has been issuing personal identification numbers for victims of identity theft. That safeguard is also available to filers who haven’t had their identity stolen. Check with the IRS to get your personal pin and file early!
The Phony IRS Agent Scam
Intimidation is a powerful tool that is used by criminals. For this scam, the intimidation comes from a phone call or email by someone claiming to be an IRS agent. That phony agent will then demand a quick payment in order to prevent you from being arrested, deported or some other extreme punishment. Just hearing those words, “I’m calling from the IRS” can send chills up your spine. Those phone calls are 100% fake.
The IRS doesn’t make phone calls asking for payments or other personal information. They communicate with notices sent through the mail. If someone calls claiming to be an IRS agent, ask for their identification number and request that you call them back. Then search the number they used to call you online. Chances are you will find it is part of a scam network. You can also call the actual IRS at 1-800-829-1040 to find out if they are looking for you. Most often, if someone claiming to be the IRS calls your home or cell, just ignore them.
The Phony Charity Scam
Another popular scam used by criminals is to set up a phony charity. These prove to be most effective during the holidays when everyone is in the mood to give. Of course, those phony charities can entice you with a “tax deduction.” There is nothing wrong with writing off a charitable donation. The problem happens when that charity isn’t legit. Before you give to a new/unknown charity, check their legal status. You can find out if they are registered through the IRS website. If the charity is legit, they won’t have a problem taking your donation the following day. If you find out they are a scam, then report them to the Federal Trade Commission.
The Tax Preparer Phishing Scam
Phishing is the sophisticated scheme used by online criminals to gather personal information. Usually, they’ll send out an official-looking email asking you to click on a link to check the status of your bank account or credit card. Once you click over, you’ll be asked to provide all kinds of personal information, and they’ve hooked you.
Around tax time, the phishers don’t just target individuals — they also go after tax preparers. They send out emails telling the accountant to update their status for the IRS e-services portal. That sounds completely legitimate. Sadly, it’s another instance where the real IRS would never ask for that information through an email. It will be hard to check if your tax preparer has been scammed.
Bottom line: Just because someone asks for your information doesn’t mean you have to give it up. In the amount of time it would take to type in your facts, you could also find out if that request is real or a scam. Stay on top of your own information and where it is going.