Tax season always brings out a new batch of scams designed to separate you from your hard-earned cash. Here are the top scams that you should be looking out for this year.
Tax Refund Fraud: This happens when scammers file a fraudulent return using your Social Security number. The scammers file early and inflate your refund. They get your refund before you have a chance to file.
There are two ways to avoid this fraud:
– Protect your Social Security number. Never respond to unsolicited emails by providing personal information.
– File for an Identity Protection Pin from the IRS before you file your taxes. The IP Pin is a six-digit code that must be used to file your tax return in addition to your Social Security number. Once you’ve opted in, you cannot opt-out and you will receive a new PIN each year through the mail. Visit this site to learn more about the program: https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin
Ghost Tax Preparers: Tax preparers are required to sign your return and include their Preparer Tax Identification Number on the return. If your preparer does not sign your return and provide their PTIN, take your information and walk away. They are likely trying to make a fast buck at your expense.
IRS Phone Scam: The scammers call you saying they are the IRS and you have a tax bill that must be paid immediately or you will be arrested. The scammers can even make their caller ID show as “IRS” on your phone.
The IRS will never:
– Call to demand immediate payment using a specific payment method such as a pre-paid debit card, gift card or wire transfer. The IRS almost always sends mail correspondence before contacting a taxpayer.
– Threaten to bring in local police or other law-enforcement to have the taxpayer arrested for not paying.
– Demand that taxes be paid without allowing the taxpayer to question or appeal the amount owed.
– Ask for credit card or debit card numbers over the phone.
– Call about an unexpected refund.
If you get one of these calls and you are concerned that you owe the IRS, contact your tax preparer (assuming they aren’t ghosting you) or call the IRS directly by going to IRS.gov/help/telephone-assistance to get their number.
Never call a number that was left for you on your voice mail. Make sure you are calling the real IRS.
W-2 Phishing Scam: In this scam, the crooks send you an email posing as your boss urgently requesting sensitive human resources information. If you send it, the scammer now has the information needed to steal the identity of everyone in your office.
This is a popular wire-fraud scam as well. Before you send any confidential information or funds, always confirm the identity of who is requesting the information in some way other than by email.
Make sure you have a culture that empowers your people to question requests. This scam works best in dictatorial cultures where the people are afraid to question anything the boss asks for.
If you fall for this scam, immediately report it to the IRS and the employees affected.
Unemployment Benefits: Due to the pandemic, many individuals have filed for unemployment benefits for the first time. Scammers have taken advantage of this by filing for unemployment benefits using stolen identities.
Because unemployment benefits are taxable income, states issue Forms 1099-G, Certain Government Payments, to recipients and the IRS.
If you received a 1099-G for unemployment compensation that you did not receive, follow the steps on this link to fix the problem: https://www.irs.gov/identity-theft-fraud-scams/identity-theft-and-unemployment-benefits.
The IRS does its best to inform taxpayers of scams and potential solutions at their Tax Scams/Consumer Alerts webpage. Check it out at https://www.irs.gov/newsroom/tax-scams-consumer-alerts.
Stay alert and stay safe.
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Curt Fowler is president of Fowler & Company and director at Fowler, Holley, Rambo & Stalvey. He is dedicated to helping leaders build great organizations and better lives for themselves and the people they lead.
Curt and the team at FHRS help leaders build great companies through Virtual CFO, strategy, tax and accounting services.
Curt is a syndicated business writer, keynote speaker, and business advisor. He has an MBA in strategy and entrepreneurship from the Kellogg School, is a CPA and a pretty good guy as defined by his wife and four children (No. 5 coming June 2021!).
