Top 5 Tax Scams for Taxpayers Should Know 

In cases where an offer seems excessively favorable, it likely carries hidden risks. There has been a surge in tax scams, in misleading ads circulating on social platforms, asserting that taxpayers can receive free funds from the IRS. An escalating number of false claims have flooded the IRS system, suggesting that individuals are seeking credits they are not legitimately qualified for, causing substantial delays in receiving refunds. When a tax refund is flagged for potential issues, the IRS will take action by temporarily halting the process and corresponding with the taxpayer through written communication. Typically, recipients can expect to receive a communication prompting them to confirm their identity, along with another letter requesting further evidence to support their eligibility for claimed tax credits.

In order to steer clear of significant fines and the possibility of further investigation from the IRS, individuals who mistakenly applied for credits must promptly revise their tax returns to eliminate the doubtful credit.

In its ongoing efforts to combat fraud, the IRS frequently releases warnings regarding tax scams and misinformation circulating on social media platforms. Recent tax seasons have seen a surge in fraudulent refund claims fueled by deceptive schemes spread through social networks. To address this issue, the IRS has intensified its enforcement actions aimed at challenging suspect tax credits and refund claims.

5 Common Tax Scams Taxpayers Should Be Aware

1. Phishing Scams:

Scammers may impersonate the IRS through emails, phone calls, or text messages, attempting to steal personal sensitive information like Social Security numbers, bank account details, ID or passwords.

It has come to light that there are individuals impersonating IRS agents, aiming to deceive unsuspecting victims. These scammers insist on prompt payment through gift cards or wire transfers, using threats of imminent arrest or deportation to instill fear. Remember, the IRS never reaches out through phone calls or emails, nor do they require payment through such specific methods.

2. Tax Refund Fraud:

Scammers may file fraudulent tax returns using stolen personal information to claim refunds in your name.

When individuals with malicious intentions use stolen Social Security Numbers to file fake tax returns, they are attempting to secure fraudulent refunds ahead of law-abiding taxpayers. The discovery of this scheme typically occurs when the legitimate tax return is declined.

3. Tax Debt Scams:

Scammers threaten legal action or arrest if you don’t immediately pay a fabricated tax debt.

Be cautious of individuals who promise to resolve your tax debts for a fraction of the owed amount, demand significant upfront fees, offer assurances without assessing your specific circumstances, and submit claims despite knowing you do not meet the eligibility criteria.

4. Fake Tax Charities:

Scammers set up fake charities to solicit donations during tax season, taking advantage of people’s generosity.

Following a sudden surge in demand for immediate donations, there has been an increase in fraudulent activities involving names that closely resemble legitimate organizations. These scammers typically request payments through gift cards or wire transfers, exploiting the urgency and emotions surrounding natural disasters or crises.

5. Tax Preparer Fraud:

Dishonest tax preparers may inflate refunds or take advantage of clients by stealing their personal information.

Choosing not to sign the tax returns they have completed, some tax preparers engage in unethical practices. They might overstate refunds by including false deductions, or even commit fraud by altering bank details to redirect refunds to themselves. In some cases, these unscrupulous individuals vanish once the returns are filed, leaving innocent taxpayers responsible for the consequences of the fraudulent actions.

To Protect Yourself From Tax Scams:

• The IRS will never ever initiate contact through email, social media, or text messages. The IRS typically communicate through official mail.
• Never give out personal sensitive information over the email nor over the phone unless you initiated the contact and are certain you are speaking with a legitimate representative.
• Research charities before donating. Ensure they are registered with the IRS.
• Choose a reputable tax preparer. Check their credentials and references.

If you suspect you have been targeted by a tax scam, report it to the IRS immediately. The IRS website provides information on how to report tax scams and protect yourself from identity theft. You can also access your online account on the IRS website to view your tax records and ensure no fraudulent activity has occurred. Please note that this information about specific tax scams and how to protect yourself is not derived from the sources provided but is based on general knowledge. You may want reach out to our free dedicated PriorTax Professional to guide you from start to finish.

To Report Tax Scams

Contact Treasury Inspector General for Tax Administration (TIGTA) or visit IRS.gov.

This entry was posted on Thursday, December 5th, 2024 at 8:00 am and is filed under Tax and Life Changes, Tax News, Tax Tips and Tricks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.