Scammers are becoming increasingly intelligent and are developing new ways to access consumer funds and personal information. Here at CTFCU, our biggest priority is the financial wellness of our members, and that includes keeping them and their money safe. To ensure member safety, we put together this series to help you recognize the signs of fraud and ways to protect yourself.
Next in our series: Income Tax Fraud.
Income Tax Scams
Fraudulent activity is prevalent during tax season, and taxpayers should be on high alert for scammers who appear during this time of year. Here are some common scams and tips to help you avoid becoming the next victim.
Emails and phone calls appearing to be from the IRS are prominent during tax season. Scammers will demand immediate payment for unpaid back taxes or will request sensitive personal information as a form of identity verification. This data is then used to commit identity theft. Fraudulent emails could also include a link that infects the user’s device with malware when clicked.
Avoid opening any emails that look suspicious and answering phone calls from unknown numbers. Taxpayers should note that the IRS will not initiate contact with them via email or phone call in regards to a tax refund or payment without first providing written notice. If you receive a call from someone claiming to be the IRS, hang up immediately and call the IRS contact center directly for verification.
2. Tax Preparer Fraud
The majority of tax professionals provide a trustworthy service, but consumers should be on the lookout for imposters. Dishonest tax preparers can file income taxes incorrectly, commit identity theft, or coerce clients into paying a large portion of their tax refund as a “service fee.”
You can find legitimate tax preparers on the IRS website to assist with verification before you submit any sensitive information.
3. Refund Scams
In this instance, someone posing as a fraudulent IRS agent will make contact regarding a large refund sent to the taxpayer in error. The scammer will demand that a portion of the funds be returned via a prepaid debit card or other transfer methods. Victims of this type of fraud normally lose any monies sent to the scammer, with little recourse for recoupment.
If you receive any contact of this sort by mail, email, or phone call, call the IRS immediately to inquire. Remember, the IRS rarely issues refunds for more than the amount due to a taxpayer.
It is best to remain vigilant during tax season to prevent identity theft. Note, the IRS will typically contact you via mail first before calling and won’t ask you to share sensitive information over the phone. Be sure to use the strongest passwords and security settings on your computer if you choose to file online. Be alert and protect your finances. If you are the target of a tax scam, report the incident to the IRS or the Federal Trade Commission.