Beware: Top Identity Theft Scams and How to Protect Yourself

Tax season is a prime time for scammers to take advantage of unsuspecting victims. From phishing emails to fraudulent tax preparers, the tactics used by scammers are becoming more sophisticated by the year. These scams can result in stolen personal information, financial loss, and even legal trouble.

To help protect yourself during this crucial time, it’s essential to stay informed about the most common tax-related frauds. Read on to learn some of the most common scams that are currently circulating and how you might protect yourself and your loved ones.

1. Phishing Scams Fraudsters send unsolicited emails or texts impersonating the IRS, aiming to steal personal information. They may claim issues with your tax return or offer refunds to prompt you to provide sensitive data.

2. Phone Scams Scammers impersonate IRS agents, threatening arrest or legal action unless immediate payment is made. They often demand payment via gift cards or wire transfers.

3. Identity Theft Criminals use stolen personal information to file fraudulent tax returns and claim refunds. Protecting your personal data is crucial to prevent this type of scam.

4. Fake Tax Preparers (“Ghost Preparers”) Some individuals pose as tax professionals but lack proper credentials. They may charge fees without providing legitimate services or signing the tax return.

5. Unclaimed Refund Scams Scammers send fake communications claiming you have unclaimed tax refunds, prompting you to provide personal information to “claim” the refund.

6. Employee Retention Credit (ERC) Scams Fraudsters promote false claims for the ERC, a pandemic-era tax credit, targeting businesses that do not qualify. They may charge large fees for assistance in applying for the credit.

7. Fake W-2 Scams Scammers encourage taxpayers to falsify W-2 forms to inflate refunds, which can lead to significant penalties and legal issues.

8. Donation and Charity Scams Fraudsters impersonate legitimate charities, especially during tax season, to solicit donations. It’s essential to verify the legitimacy of any charity before donating.

9. Tax Preparer Fraud Dishonest tax preparers may falsify information on tax returns to inflate refunds, charge excessive fees, or fail to sign returns.

10. Refund Calculation Scams Scammers claim to have recalculated your refund and ask for personal information to “process” the new refund.

Protective Measures:

  • Verify Communications: The IRS will not initiate contact via email, text, or social media. Always verify any unsolicited communication by contacting the IRS directly.
  • Protect Personal Information: Safeguard your personal and financial information. Be cautious when sharing details online or over the phone.
  • Choose Tax Preparers Carefully: Ensure your tax preparer has a valid Preparer Tax Identification Number (PTIN) and is reputable.
  • Report Scams: If you encounter a tax scam, report it to the IRS or the Social Security Administration Office to help protect others.
  • IRS Identity Theft Protection Tool: A security measure that provides taxpayers with a unique six-digit PIN to prevent fraudulent use of their Social Security number on federal tax returns.

irs.gov

ssa.gov

https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin

Additional Resources & Articles

Staying informed and vigilant is crucial in protecting yourself from these evolving tax scams.

This post is shared by Davis & Hodgdon CPAs as a service to our clients, business associates and friends.  Recipients should not act on the information presented without seeking prior professional advice.  For more information or to set up an appointment please reach out to us today.

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