How to Identify and Avoid Online Tax Scams

Tax season can be a stressful time for many people, and online tax scams only add to the anxiety. These scams aim to steal your personal information, defraud you, or both. In this article, we will discuss common online tax scams, how to identify them, and what you can do to avoid falling victim to these schemes.

1. Common Online Tax Scams

There are several types of online tax scams that you should be aware of:

1.1. Phishing Scams

Phishing scams involve criminals sending seemingly legitimate emails or messages that attempt to trick you into providing your personal information. In the context of tax scams, these emails may appear to come from the IRS or a tax preparation company.

1.2. Tax Identity Theft

Tax identity theft occurs when a criminal steals your Social Security number and other personal information to file a fraudulent tax return in your name, claiming a refund.

1.3. Fraudulent Tax Preparation Services

Some scammers pose as tax preparation professionals to steal your personal information or charge you for services they never provide.

1.4. Fake Charities

Scammers may create fake charities or pose as representatives of legitimate organizations, asking for donations and attempting to take advantage of your generosity during tax season.

1.5. IRS Impersonation Scams

In these scams, criminals pretend to be IRS agents, contacting you via phone, email, or text message and demanding immediate payment for alleged tax debts, often using threats or intimidation.

2. Identifying Online Tax Scams

Recognizing the warning signs of online tax scams can help you avoid falling victim to these schemes:

2.1. Unsolicited Contact

The IRS will never initiate contact with you via email, text message, or social media. Any unsolicited communication claiming to be from the IRS should be treated as suspicious.

2.2. Requests for Personal Information

Be cautious of any communication asking for personal or financial information, such as your Social Security number or bank account details. The IRS will not request this information through email or text message.

2.3. High-pressure Tactics

Scammers often use high-pressure tactics, such as threatening legal action or imprisonment, to coerce you into providing information or making payments. The IRS will not threaten you or demand immediate payment in this manner.

2.4. Requests for Unconventional Payment Methods

The IRS will never ask you to make payments using gift cards, prepaid debit cards, or wire transfers. Any request for such payment methods should be considered a red flag.

2.5. Inconsistencies in Email Addresses or Links

Carefully examine the sender’s email address and any links included in the message. Scammers often use addresses or URLs that are similar to legitimate ones but contain slight discrepancies.

3. Tips for Avoiding Online Tax Scams

Follow these guidelines to protect yourself from online tax scams:

3.1. Educate Yourself

Stay informed about the latest tax scams and fraud prevention measures by checking the IRS website and other reliable sources.

3.2. Use Trusted Tax Professionals

Make sure to use a reputable tax preparation service or professional to help with your taxes. Verify their credentials and check for any complaints or disciplinary actions against them.

3.3. Secure Your Personal Information

Take steps to safeguard your personal information by using strong, unique passwords for your online accounts, enabling multi-factor authentication, and being cautious about sharing your information online.

3.4. Be Wary of Unsolicited Communication

As mentioned earlier, the IRS will not initiate contact with you via email, text message, or social media. Treat any unsolicited communication claiming to be from the IRS with skepticism.

3.5. Verify the Legitimacy of Charities

Before making a donation, research the charity to ensure it is legitimate. Use resources like the IRS’s Tax-Exempt Organization Search or websites like Charity Navigator and GuideStar to verify the organization’s tax-exempt status and reputation.

4. What to Do If You Suspect a Tax Scam

If you think you’ve encountered an online tax scam or have been a victim of one, take these steps:

4.1. Report Phishing Scams

If you receive a suspicious email claiming to be from the IRS, do not click on any links or open any attachments. Instead, forward the email to phishing@irs.gov and then delete it.

4.2. Report IRS Impersonation Scams

If you’ve been contacted by someone claiming to be from the IRS and you suspect it’s a scam, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at www.tigta.gov or by calling 1-800-366-4484.

4.3. Report Tax Identity Theft

If you believe you’re a victim of tax identity theft, file a complaint with the Federal Trade Commission (FTC) at www.identitytheft.gov and contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.

4.4. Report Fraudulent Tax Preparation Services

If you’ve encountered a fraudulent tax preparer, file a complaint with the IRS using Form 14157, Complaint: Tax Return Preparer, which can be found on the IRS website.

4.5. Report Fake Charities

To report a suspected fake charity, file a complaint with the IRS using Form 13909, Tax-Exempt Organization Complaint (Referral) Form, which is also available on the IRS website.

5. Conclusion

By staying informed about common online tax scams, learning to recognize the warning signs, and following the guidelines outlined in this article, you can protect yourself and your personal information from cybercriminals during tax season. Always remain vigilant and report any suspicious activity to the appropriate authorities to help combat these scams and keep your financial information secure.