How to Avoid Today’s Top Tax Scams
Here's a text making the rounds: "You have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this payment into your account. Continue here to accept this payment."
There is no $1,200. The IRS warns that anyone following the link in the text would be directed to a fake website designed to steal bank account information. This is an example of "phishing" — emails or texts that appear to come from a legitimate source but lure you into divulging passwords or other personal information.
Tax scams crop up year-round, but they proliferate during tax season. Each year, the IRS compiles a list of the "Dirty Dozen"— top tax scams during filing season. Phishing is a perennial on the list. Here are more schemes to watch out for now:
Fake charities. Con artists set up bogus charities to solicit donations after natural disasters, often using names similar to well-known, legitimate organizations. Use this IRS search tool to find out if a charity is authentic.
IRS impersonators. Agency impostors threaten taxpayers over the phone about paying fake tax bills. The IRS doesn't demand immediate payment or financial information over the phone.
Refund theft. Thieves file false tax returns to collect refunds using taxpayers' information. File a return early before thieves get a chance to do so.
Unscrupulous return preparers. Dishonest tax preparers may talk taxpayers into committing tax fraud to get inflated refunds. Avoid preparers who won't sign or include their Preparer Tax Identification Number on tax returns.
Offer in Compromise mills. Be wary of companies that promise to settle tax debts for "pennies on the dollar" through an IRS "Offer in Compromise." These companies charge high fees to file an Offer in Compromise, even though the taxpayer may not qualify for it. Use the IRS Offer in Compromise Pre-Qualifier tool to see if you would be eligible.
Fake payments with repayment demands. Fraudsters file bogus tax returns and direct the refunds to be deposited into taxpayers' accounts. Then, posing as IRS employees, the fraudsters call the taxpayers to say that the erroneous refunds must be repaid with gift cards. Contact your bank and the IRS if you get such a call.
Payroll and HR scams. Fraudsters gain access to workers' email accounts and then message their employers to directly deposit paychecks into accounts the fraudsters control. If you're a victim of this business email scam, report it to the FBI Internet Crime Complaint Center.
Ransomware. Victims inadvertently download malware on their computers that blocks access to their files. Then they receive demands for payment in virtual currency to unblock the files. For protection, the IRS advises taxpayers to use the free multi-factor authentication features offered on tax preparation software products.
Please note: The contents of this publication provided by MissionSquare Retirement is general information regarding your retirement benefits. It is not intended to provide you with or substitute for specific legal, tax, or investment advice. You may want to consult with your legal, tax, or investment advisor to review your own personal situation. Some of the products, services, or funds detailed in this publication may not be available in your plan. This document may contain information obtained from outside sources and it may reference external websites. While we believe this information to be reliable, we cannot guarantee its complete accuracy. In addition, rules and laws can change frequently.