By Robb Hicken, Better Business Bureau
IRS has released its “dirty dozen” scams along with a warning to be cautious when preparing and filing tax returns.
The Dirty Dozen listing, compiled by the Internal Revenue Service each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.
Here are the Top 5 listed (Read the entire list here):
Identity Theft – Tax fraud through the use of identity theft tops this year’s Dirty Dozen list. Identity theft occurs when someone uses your personal information, such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes. In many cases, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.
Pervasive Telephone Scams – The IRS has seen a recent increase in local phone scams across the country, with callers pretending to be from the IRS in hopes of stealing money or identities from victims. These phone scams include many variations, ranging from instances from where callers say the victims owe money or are entitled to a huge refund. Sometimes these calls are paired with follow-up calls from people saying they are from the local police department or the state motor vehicle department.
Phishing – Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft. If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to email@example.com.
‘Free Money’ Promise/Inflated Refunds – Scam artists routinely pose as tax preparers during tax time, luring victims in by promising large federal tax refunds. Scam artists use fliers, advertisements, phony store fronts and even word of mouth to throw out a wide net for victims. They may even spread the word through community groups or churches where trust is high. Scammers prey on people who do not have a filing requirement, such as low-income individuals or the elderly.
They also prey on non-English speakers, who may or may not have a filing requirement.
Return Preparer Fraud – About 60 percent of taxpayers will use tax professionals this year to prepare their tax returns. Most return preparers provide honest service to their clients. Unscrupulous preparers prey on unsuspecting taxpayers, and the result can be refund fraud or identity theft. It is important to choose carefully when hiring an individual or firm to prepare your return. This year, the IRS wants to remind all taxpayers that they should use only preparers who sign the returns they prepare and enter their IRS Preparer Tax Identification Numbers (PTINs). The IRS also has a web page to assist taxpayers. For tips about choosing a preparer, visit www.irs.gov/chooseataxpro.
Bottomline: The IRS will not call, email or write you
demanding immediate payment with a credit card. If you
get a phone call from someone claiming to be IRS, here’s what you should do: If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040.