Tax Season Tips

Tax Season scams and tips to avoid them

Last updated on March 18, 2021

For Americans looking forward to receiving their $1,200 stimulus checks, the IRS warns: look out for tax scams. Scammers have become so sophisticated that thousands of victims could lose their refunds. Plus these crafty cons have a new tool this year: QuickBooks malware. 

Tax scams typically rise during tax seasons or during times of crisis – and we’re experiencing both right now. Always huge, they shot during the pandemic with young Americans – those in the 20ś age bracket – mostly affected. Last year’s Annual Report by the IRS Criminal Investigation found thieves had hauled in more than $2.3 billion on tax fraud. 

Scammers send you intimidating calls, texts or emails where they impersonate the IRS and demand tax payment and/ or certain financial details to verify your identity. With the last, they file phony tax returns in your name, then pocket your refunds. Variations on these tax scams come out all the time. 

Don’t fall for it! The IRS has an entire website on tax season cybersecurity tips and on how to avoid tax season scams.

How do tax scams work?

You get a letter, email, text (or more recently, tweet or message through your social media platform) stating you owe the IRS money and referring you to a URL to pay. Other times, a Word attachment picks up your personal data, cracks into your accounts and, from there, sells your financial information on underground marketplaces. More often, you get a call with this official-sounding intimidating voice on the other end (poor English, mind you) who tells you he’s the IRS (or the police) and that you’ll be jailed or fined if you don’t pay ASAP.  

Through these and similar tricks, other scammers try to elicit your personal financial information, such as your Electronic Filing Identification Numbers and your Social Security ID, so they file taxes in your name then pocket your refunds. 

Ignore them. 

If the IRS were to contact you, it would be via an official IRS-addressed letter by mail. They don’t waste time on calls, while emails, texts and social media are not their game. They’re too classy for that. 

Six common IRS tax scams

1. Phishing

Con artists, posing as the IRS,  refer you to fraudulent websites that lure you with tricks to get your personal information.  

2. Verification requests

Scammers, posing as the IRS, ask you to verify your W2 or personal information. On the rare occasions the IRS were to do this, they’d mail you a Letter 507IC and ask you to verify your identity using the Identity Verification Service. 

3. Phone scams

Scammers, impersonating the IRS, intimidate you to pay your outstanding taxes. Their purpose is to elicit your personal information. 

4. Inflated refund claims

Sophisticated hackers that claim to be tax preparers post bulletins in churches, storefronts and the like offering incentives such as a commission off your refund or their ¨expert¨ help to win you big refunds.  

5. Fake charities

Scammers impersonate well-known charities and tug at your pity-strings. This ploy also helps them elicit your personal financial information. Check your charities before you give and never reveal your ID or personal data. Also, don’t contribute in cash. 

6. Identity theft

Scammers, somehow, get your identity details and file taxes in your name, securing your refund.  Check your credit reports and review your Social Security Administration earnings statement annually. Needless to say, protect your personal data. 

The new Quickbooks malware scam

There’s a new Quickbooks malware on the market, where scammers phish you either through email or through a Word document. Victims who fall for this have their stolen Quickbook files squirreled to the Deep Web, where your financial information sells to the highest bidders. 

Danny Jenkins, CEO of Cybersecurity research site, ThreatLocker says he’s seen Quickbook databases sell anywhere from $100 to upwards of thousands of dollars.  

The best way to protect yourself? Limit Quickbook access to a single user. Make sure that the everyone box for Quickbooks permission is empty, particularly after you’ve had your system repaired. 

Oh, and where’s my stimulus check?

Here’s how this trick works. You get a message urging you to click on a link for your stimulus check or to verify personal information. Spam! 

  1. The IRS doesn’t call these stimulus checks. Rather, they’re called “economic impact payment”. 
  2. You’ll get your stimulus checks in the mail in an official IRS-addressed envelope. No other way. Want to know your status? Use this IRS’ payment tracking tool for up-to-date information. 
  3. In most cases, you don’t need to fill out an application or contact the IRS to get your check, nor can these checks be rushed by ¨faster stimulus check delivery¨ (that’s a con ploy).  

If you didn’t get your stimulus check, you’ll see it as a refund through your recovery rebate credit on your 2020 tax return. 

How to Detect Tax Fraud

The most common signs of tax fraud include: 

1. Your return has already been filed 

You file your taxes and get a legit letter from the IRS stating your taxes have already been filed.  

2. An unknown employer sends you a tax form

You get a W2 or 1099 form from a stranger. Trash it. Stranger wants your financial information.

3. The IRS asks you to verify information 

That would be the Form 507IC and possibly because someone tempered with your returns. 

4. You owe more money to the IRS but can’t figure out why 

The real IRS says you owe them money for no explainable reason.  

5. Your new tax preparer has odd requests

He, or she, may be a phony. Have you checked their credentials? (As an aside, all tax preparers should sign off on your returns).  

6. You get phone calls from the IRS demanding payment 

They’d never call (or email). They would write in their gentlemanly  manner. 

Tips on avoiding tax schemes

1. File taxes early

You have until May, 17th, but why not hit it now? Beat the cons to their tricks. They’re as busy as you.  

2. The IRS supposedly calls you 

Do as this police agent did. He took their phone number and names and thanked them for promising to arrest him, then hung up. If it happens to you, you could call the legit IRS to check on your tax returns and hand over that con caller’s phone number and details. 

3. Suspect erroneous refunds

They sound good – until they aren’t. Someone sends you an unexpected IRS refund. It could be a ploy. 

4. Suspect URLs as well as email addresses

If you’re using online filing software, check the URL that it’s legit. Example: If you use Turbotax, the URL should not read www.turbotax.ru 

5. Know which tools are legit

The IRS has its own free tax filing tool – and so do scammers. Check reviews. 

6. Don’t use public Wi-Fi while working on your taxes 

If you have to, consider using a VPN. 

What to do if you’ve been scammed?

Conclusion

Tax scams are that common that the IRS has its own section on their variations. More than that, scams double during times of crises and tax filing seasons, so protect your personal identity and look out for suspect signs. The IRS should never intimidate and would always contact you by mail. 

Still unsure whether it’s the IRS? Call that esteemed office yourself and ask them. You’ll be glad you did. After all, each of us wants our stimulus check and refunds, don’t we?