Advice On Avoiding Tax Scams From Your Tax Accountant
In recent years, thousands of people have lost millions of dollars and their personal information to tax scams and fake IRS communication. Scammers use the mail, telephone, fax or email to set up their victims. Companies and individuals must be vigilant in guarding against criminals attempting to obtain sensitive information through a variety of scams.
The most important thing to remember is that the IRS does not initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. In addition, the IRS does not threaten taxpayers with lawsuits, imprisonment, or other enforcement action. Recognizing these telltale signs of a phishing or tax scam could save you from becoming a victim.
One particular scam that companies need to be on the look out for is a W-2 “spoofing” email that appears to be sent by a company’s CEO or CFO to one or more employees in human resources and payroll, or an executive assistant. Cybercriminals target these emails at times when the executive may be traveling, the business may be preparing tax statements or other periods when an employee is more likely to be think it is a legitimate request.
Cybercriminals attempt to trick the employees into disclosing employee names, Social Security
numbers and income information. The criminals then attempt to file fraudulent tax returns for tax refunds.
Other types of email tax scams are designed to trick taxpayers into thinking they are official communications from the IRS or others in the tax industry, including tax software companies. These phishing schemes may seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.
Be alert to bogus emails that appear to come from your tax professional, requesting information for an IRS form. The IRS does not require Life Insurance and Annuity updates from taxpayers or a tax professional.
Besides bogus emails, another tax scam to be on the lookout for is an aggressive and sophisticated phone scam targeting taxpayers. Callers claim to be employees of the IRS, using fake names and bogus IRS identification badge numbers. They may know a lot about their targets, and they usually alter the caller ID to make it look like the IRS is calling.
Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. Victims may be threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting. Or, victims may be told they have a refund due to try to trick them into sharing private information. If the phone is not answered, the scammers often leave an “urgent” callback request.
Note that the IRS will never:
- Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.
- Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- Ask for credit or debit card numbers over the phone.
If you are ever approached by someone requesting tax information and you’d like to make sure you aren’t falling victim to a potential tax scam, please consult your trusted tax accountant at our CPA firm.
