What Are Tax Scams?

Tax scams are fraudulent acts by which unscrupulous individuals steal personal information or swindle people’s money via tax-related means. Some thousands of unsuspecting individuals of varying socioeconomic status and educational backgrounds fall victims to IRS tax scams each year.

How Are IRS Tax Scams Perpetuated?

1. Phishing: This IRS scam involves using messages, emails, websites, and social media by scammers disguising themselves as the IRS staff. Whatever the means, the primary aim is to trick victims into releasing personal, sensitive, and financial information, which they can use to access the recipient’s credit card account or bank.
2. Phone calls: Here, scam artists pose as IRS staff and call their victims, attempting to collect tax debts. They threaten their victims with arrest, license revocation, Social Security Number suspension, or deportation if the money is not paid immediately. These bad guys can go all the way out, even to the extent of using IRS information and logo, all to prove their “authenticity.”
3. Tax Return Fraud: In this IRS scam, criminals act as tax preparers. These criminals do their illegitimate acts by committing IRS fraud to beef up returns. They eventually will request their payment based on a percentage of your “boosted tax refund.” Another tactic is they may request for your refund to be deposited in their bank or may prepare returns without asking for necessary supporting documents.

4. Identity Theft: This occurs when someone uses personal information without authorized permission. This information can be stolen from private computers and phones, medical and financial service providers, documents, tax preparers, and the cloud. This information can be used to file a tax return and even claim a refund.
5. Fake charities: Some phony charities may take advantage of the donator’s niceness to steal their money or even request personal financial information, which they can use to steal their identity.

How To Protect Yourself From Falling From IRS scam:

1. You should be wary of sharing your personal or financial details online, especially on unfamiliar websites or that you presume to be suspicious. Moreover, it is advisable to keep your profile private in the social media space. This is because criminals can easily steal your identity through this means.
2. You must note that the IRS will not send you some random or unsolicited email requesting sensitive personal or financial information such as your Personal Identification Number (PIN) or your Social Security Number (SSN). The popular means by which the IRS reaches out to anyone at first is via mail which is usually delivered by the U.S. postal service.

1. Do not give out identifying information through phone calls, no matter how convincing a person sounds. Furthermore, you should verify issues relating to audit or refund from the IRS.
2. You should never click on any suspicious link or download any attachment. Inform the IRS about any suspicious message.
3. Donate ONLY to recognized charities. Never give out personal information in order to get a receipt for your donation.
4. To avoid being a victim of tax return fraud, you should avoid any tax preparer that makes too good to be true offers or requests enumeration based on your refund. Before approving a tax-preparer to help you with your tax returns, you must ensure they have a PTIN. You should also review the status of their license.

What is Tax Fraud?

Tax frauds are deliberate acts of falsifying information on a tax return by an individual or business organization or by a tax preparer (on behalf of his client) with the intent of reducing tax bill. Tax frauds include: not reporting all income, false claims (e.g., claiming personal expenses as a business expense, claiming an exemption for a nonexistent dependent, and claiming false deductions), using a wrong SSN, asset concealment, deliberate refusal to file tax return or pay taxes. In the United States, IRS fraud is considered a criminal offense. IRS fraud is of two types: civil and criminal tax fraud. In the former, the government attributes whatever misinformation as a non-deliberate error during tax preparation. Whereas in the latter, the government refers to whatsoever misinformation as a deliberate means to avoid tax obligations. The penalty for civil tax fraud is a fine with no persecution or jail time. Conversely, an individual who commits criminal tax fraud can be prosecuted and jailed.

All in all, there are several ways by which tax scams are carried out. Having a good knowledge of these tricks will prevent you from being a victim. There are different ways to legitimately reduce tax bills. Following the illegal route by committing tax fraud could come with severe consequences. At EnrolledAgent.com, there are a ton of tax consultants that can readily provide you with ways to legitimately reduce your tax obligation.