(Newswire.net — May 8, 2020) — Did you know that consumers lost $80 million in the last tax year alone because of tax fraud scams? Scammers are creating more and more ingenious methods of convincing people to hand over their money.
If you are a new taxpayer, or you are concerned about tax fraud scams, what can you do? It is important to protect yourself. Educate yourself regarding the latest tax fraud scams and you will know what and who to avoid.
Do you want to know the scams that exist in 2020? Why not take a minute to read our in-depth article to find out.
1. Phishing
Phishing is one of the most common scams on the internet. It involves a person attempting to prise important personal information from you. This could be by sending an email false representing a company or institution. In other cases, a website is set up that resembles a genuine website.
Taxes are important to us. This means that when we receive phishing emails regarding refunds, back taxes, or other tax-related subjects, we may be tempted to respond.
How can you protect yourself against Phishing? Remember that the IRS does not initiate contact regarding money transfers over email.
Do not click on links in emails unless you can verify their source. If you receive an email but have any suspicions, delete the email and separately contact your tax office to ask about the issue raised in the email.
2. Phone Scams
Scammers take advantage of people’s anxieties and try to force people to reveal important personal information over the phone. Each tax season many people fall victim to these types of traps.
Often scammers will call and claim to represent the IRS. They will claim an irregularity with your taxes. They may claim that if you do not give certain information you will be fined, imprisoned, or deported.
How can you protect yourself? The IRS always asks for any payment in a written letter that you can verify. If a person calls you and asks for money directly, you can ask them to send a letter for verification.
3. Tax Return Preparer Fraud
Preparing taxes can be daunting for new taxpayers. To help with this there are many professional tax preparation services available. For a fee, they can help you to get your taxes in order. However, if you do take advantage of one of these services, be sure to research them thoroughly.
If a tax preparation service provides fraudulent information which you then file, you could get in trouble. Further, unscrupulous individuals may advertise themselves as tax preparers but then steal identity and other information from you.
It is good for you to learn to review your own tax return before submitting. If this is overwhelming the first time, you may be able to get low-cost assistance through local community resources.
4. Inflated Refund Claims
If it seems too good to be true, it probably is. If someone promises you that they will secure a sizeable refund or ensure that you will avoid tax payments by working with them, be very careful. After all, how can they promise this without examining your accounts and history?
Often fraudsters will ask victims to sign a blank tax return form with the promise to fill in the rest later. They then steal all personal data.
Or they dishonestly fill in the data in exchange for a cut of a refund. All of this is illegal and could lead to financial ruin.
5. Falsified Income for Credit Claims and Padded Expenses
You may feel that hiring a professional to file your taxes is the easiest option. If you do take this route, remember: you are still responsible for the final tax return. If the tax return preparer inflates your income, pads expenses, or otherwise falsifies documents you are responsible.
It is important that you have all documents available to prove your income. You can obtain these from your employer or use a check stub maker service if you are self-employed. If you suspect that you have become a victim of tax preparation fraud, you can use form 3946-A to represent your case.
6. Identity Theft
Identity theft is one of the most common scams throughout the world. However, fraudsters use it to particularly worse during tax seasons.
If a fraudster can successfully learn enough information about you they can file a tax return in your name. You will not even know about it until you come to file your own return. At that point, it can be complicated to reverse the damage caused.
If this happens to you, the first thing that you should do is protect yourself and your assets. You should immediately contact your bank and freeze your accounts and credit reports.
You should then contact the IRS and report the crime. They will instruct you regarding how to start correcting the situation.
Prevention is, of course, better than cure. You should always carefully protect your personal identity information.
If you make online payments, ensure that you use a secure system and that the site has functioning encryption. When working with a tax preparer you should ensure that you send any documentation through a secure system.
Avoiding Tax Fraud Scams and Much More
You work hard to earn your paycheck every week, so you need to take extra care to ensure that it does not go into the pocket of fraudsters. Being aware of the tax fraud scams that are being run in 2020 can help you do this.
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