Taxpayers Beware – IRS Scams! Every year the IRS publishes a list of the most popular tax scams so that taxpayers will be better able to protect themselves against schemes that develop in an around the preparation of tax returns. With the 2014 tax season fast approaching, it is a good time to be reminded of the some of the items that were on the list published by this past March. Although the IRS is aware of these problem areas, it is likely that some of these same issues will surface again once tax season gets underway at the beginning of the year.
Summarized below are three of the culprits that appeared last year’s list of the “Dirty Dozen Tax Scams” published by the IRS:
Identity Theft
Identity theft occurs when someone uses a legitimate taxpayer’s identifying information without their permission to file fraudulent tax returns and claim refunds. Although the IRS has made identity theft a top priority by updating and improving their policies and practices, the identity thieves themselves have become more aggressive in their tactics. For this reason, the IRS encourages all taxpayers to be educated on this practice, including what steps to take should it occur. There is a special identity theft section (https://www.irs.gov/uac/Identity-Protection) on IRS.gov that gives tips on how to protect against this type of taxpayer fraud and instructions on how to contact the Identity Theft Specialized Unit should it occur.
Phishing
Phishing is the practice of sending out unsolicited emails or using a website that resembles a legitimate website to obtain a taxpayer’s personal information, usually for the purpose of committing identity theft. As with identity theft itself, the IRS is well aware of this type of fraudulent behavior and has a special section (https://www.irs.gov/uac/Report-Phishing) dedicated to it on their website. It is important to be aware of the fact that the IRS never solicits identifying information from taxpayers through any type of electronic communication, including text messages and email.
Return Preparer Fraud
Another common type of taxpayer fraud is the preparation of returns by unethical tax preparers. Although most preparers are honest, sharing important tax information with one who is not can have serious consequences including identity theft and lost refund money. In addition, each person is legally responsible for any return submitted under their Social Security number. With these things in mind, it is important for taxpayers to only use preparers who sign the returns and have a valid IRS Tax Preparer Identification Number. The IRS website has a special section (https://www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional) on selection of a tax professional which gives both preparer qualifications and red flags to look for in the selection process.
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