Common Tax Scams in 2017 and How to Avoid Them

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by Amna El Tawil
Tax season is already which means you have to be extra careful to ensure everything’s okay by the deadline day. But that’s not the only concern you should have; with every tax season, there also come hordes of tax scammers that try to trick you. Like we need more scams nowadays with a bunch of frauds circulating online 24/7. You’re probably wondering how not to become just one more victim of tax scam in 2017, but to avoid that unfortunate scenario it’s always useful to get informed about different “tools” scammers use to lure someone in.
The CNBC reports: “The Internal Revenue Service estimates that it prevented $22.5 billion in attempted identity theft tax fraud, but paid out $3.1 billion in fake refunds in 2014, the most recent year available.
Researchers from the Government Accountability Office said those estimates could be understated and the IRS should do more to strengthen its efforts to protect taxpayer information. The U.S. Treasury Inspector General for Tax Administration recently projected that victims collectively have paid more than $50 million to scammers posing as IRS officials since October 2013. The average amount lost is $5,200.”
So, how do they do it?
Phone scam
What happens here? Well, you get a call informing you that you have to pay some tax bill ASAP or you’ll be arrested. Of course, you don’t want this to happen so you pay because the screen does show the call is coming from the IRS. But, not so fast! Tax scammers use phone spoofing to make the number come up as IRS, and they have last four digits of your Social Security number. This gives them the vibe of legitimacy, which explains why so many people fall for the scam.
Bear this in mind:

  • They use fake IRS badge numbers and common names
  • Scammers send fake IRS emails to support their scam and make you fall for it
  • They call one more time claiming to be police or DMV
  • You’re told to submit payment either by debit card or through wire transfer

IMPORTANT: The IRS will never contact you by phone asking for money. They communicate exclusively through snail mail.
Listen to an actual recording of a fake IRS call here.
Further commentary: Always take into consideration that the IRS will not simply dial your number and say they’re filing a lawsuit against you. Regardless of how legit it might seem, never follow their demands blindly. End of commentary
Fraudulent returns
The number of fraudulent tax returns has increased significantly in recent years, with scammers using the Social Security numbers of unsuspecting individuals to file bogus tax returns with the goal of pocketing tax refunds they’re not entitled to.
The good thing is that IRS improved its security to combat this, and it seems to be working so far. However, despite these efforts, there is still the chance that your identity will be used to file a fraudulent return. And many people don’t realize they’re a victim until their actual tax return is rejected by the IRS — since it only accepts one return per Social Security number.
Although this scam is not entirely avoidable, there are some ways you can lower the risk:

  • Try to file your tax return as soon as you’re able to do so
  • Develop and use good habits with your identifying information e.g. only use your Social Security number when it’s absolutely necessary, check your credit report regularly for suspicious activity, and don’t throw papers with sensitive information like your Social Security number or bank account information in the trash

Paying the “federal student tax”
Tax scammers lure students and their parents to pay this tax bill even though it DOESN’T EXIST. Also, some aggressive scammers threaten to report students to the police if they don’t pay. If this happens, call their bluff! Why? It’s because real IRS agents never threaten to immediately bring in local law enforcement to have you arrested for not paying your taxes.
Pretending to be a tax preparer
In this scam, you receive an official-looking email whose purpose is to fool you into thinking you’re, indeed, communicating with the IRS, tax preparers or tax software companies. Basically, this is pure phishing used by scammers to seek information that will help them file a false refund in your name. To avoid them, just don’t click on links and emails from places you don’t know.
Sending fake notices regarding the Affordable Care Act
You’ll get a fake tax bill in the mail that’s supposedly tied to the Affordable Care Act. The letter, which looks exactly like a legitimate communication from the IRS, asks you to pay the penalty for not having health insurance. According to the IRS, criminals across the country are sending fraudulent versions of CP2000 notices, which are letters that inform taxpayers about discrepancies on their tax return. The fact that this one comes through mail makes it tricky and likely to fool a lot of people. However, there are ways for potential victims to spot and avoid fake notices demanding payment. Here’s what you should know about one such snail mail letter:

  • Appears to be issued from an Austin, Texas, address
  • Says the issue is related to the Affordable Care Act and requests information regarding the most recent year of coverage
  • Lists the letter number in the payment voucher as 105C
  • Requests checks made out to I.R.S. and sent to the “Austin Processing Center” at a post office box

If you suspect you’re a victim of a tax scam, you should:

  • Call the IRS directly at (800) 829-1040
  • Use the IRS Impersonation Scam Reporting website or call the U.S. Treasury Inspector General for Tax Administration at (800) 366-4484
  • File an online complaint with the Federal Trade Commission here


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See also  If you haven’t filed your Federal taxes yet because you can’t pay, file it by July 16th to avoid the higher penalty.

Further commentary: We’re going to see a lot about tax scams this season and it seems like scammers are constantly coming up with new ways to trick unsuspecting Americans. While these scams might seem legit and professional, always bear in mind that’s how they’re supposed to look. Plus, you can always contact tax expert and check it out. End of commentary


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