Tax Season's Here, and So Are the Fraudsters

Jan 11, 2017 | By: Paul C. Hamilton

"Knowledge is Power" - Sir Francis Bacon (1597)

To know is to be prepared and we here at JGC want you to be prepared. Fraudsters strike year round but, when it comes to tax fraud, their efforts increase during tax season according to the IRS. The risk of becoming a victim in this ease of information age is increasing but there are steps we can all take to reduce our risk.

The IRS has a condensed list of common tax frauds un-lovingly referred to as the “Dirty Dozen”. The scams on this list that typically affect most innocent taxpayers involve false impersonation. Impersonation takes many forms including: false tax return filing, phone fraud, letter fraud, email phishing, and malware. One common theme and a red flag to be aware of throughout many of these methods is a sense of threat and urgency, geared to throw the intended victim off their game. So don’t act. Stop and think. You always have time to seek advice before you react or respond, and we are here to help you.

Scams to watch out for:

  • Fake IRS phone calls to individuals urgently requesting tax payments and threatening legal action.
  • Phone calls demanding payment for fake taxes. The most recent is targeted at students demanding payment of the “Federal Student Tax”.
  • “Verification” calls in which the fraudster attempts to get you to verify your personal information. Not tax related, but one to be aware of is a recent scam out of Utah involving a call that the victim has failed to attend jury duty. The caller requests personal information for verification and to avoid the issuance of an arrest warrant.
  • Fake IRS bills and notices. Many taxpayers have received false CP2000 notices for tax due related to the Affordable Care Act.
  • Email malware locking down computers with message screens that some type of illegal content has been discovered. The message can look very official with government seals and links that appear to direct you to their government site.

Be Proactive.

The first and definitely the most underrated step that taxpayers can take is to file tax returns early.

Getting a tax return into the IRS system early helps prevent fraudsters from what they are after, which is any tax refund you are entitled to.

Filing a legitimate tax return early can help alert you if your personal information has been compromised. It can provide the opportunity to secure your other accounts and personal information to prevent further damage.

Know who you’re talking to.

It is important to know how the IRS will initiate contact with you.

Per the IRS website:

The IRS doesn't initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information.  In addition, IRS does not threaten taxpayers with lawsuits, imprisonment or other enforcement action.  Being able to recognize these tell-tale signs of a phishing or tax scam could save you from becoming a victim.”

IRS correspondence generally comes in the form of an IRS letter notice. But as previously mentioned, letter fraud is another way in which fraudsters will attempt to gather your information or solicit payments.

Key Takeaways:

  • Filing early helps catch and reduce ID theft early on.
  • The IRS does not initiate contact to taxpayers via email or any other social media platform.
  • The IRS will not demand payment or threaten you over the phone.

Keep an eye out for my next post: It’s happened to me; what’s my next step. 

So please remember, don’t act out of fear or impulse. Contact our office immediately if you suspect you have been the target of fraud. We’re here to help. 503-390-7880.

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