During the early months of the year, tax filing season quickly becomes tax scamming season. In the hopes of focusing public attention on this problem, the IRS has released its annual list of the Dirty Dozen tax scams—many of which lead to identity theft.
It is always easy to become overconfident in your ability to detect fraud. Most executives typically know that if a caller demands immediate payment via gift cards, they are surely not from the IRS. However, scammers adapt quickly and have begun to use subtler tricks to access your personal info and financial resources. By the time the IRS can describe a new scam, they’ve already moved on to another.
To best protect yourself, you should focus less on the details of individual ruses and more on the standards the IRS generally uses when contacting taxpayers. It helps to understand what the IRS will not do when contacting taxpayers, including:
- Demand payment with no opportunity to question or appeal the amount they say you owe.
- Call a taxpayer and demand immediate payment using a specific method like a debit card, gift card, or wire transfer.
- Call about a refund that was not expected.
- Threaten an individual by claiming to bring in local police, immigration officers, or other law enforcement agencies. The IRS cannot revoke your driver’s license, business licenses, or immigration status.
Here are a few more tips to help confirm that a communication is official IRS business and not from a scammer:
- Always be suspicious of any purported IRS contact that doesn’t start with a letter. This also includes calls or emails claiming to be from a friendly source suggesting that you are entitled to some kind of refund of which you weren’t aware. Almost every IRS process that exists for resolving a question or concern with a taxpayer starts with at least one snail-mail letter delivered by the U.S. Postal Service. If the initial contact you get is by phone or email, do not give personal information or click links until you independently verify the authenticity of the contact.
- It is much easier for hackers to obtain the last four digits of your Social Security number as compared to your full identity. Always question any unexpected IRS contact that claims to be an official communication but includes only the last four digits of your tax identification number.
- If you have determined that your identity has been compromised and a fraudulent tax return has been filed in your name, you might see a deposit to your bank account for a refund for which you did not file. If this happens, the IRS has specific instructions on how to notify them and resolve the problem.
- If any contact instructs you to pay an agency or individual other than the U.S. Treasury, treat this as suspicious and report it to the IRS immediately via email at email@example.com.
- If someone contacts you claiming to be from the IRS and you believe the contact is fraudulent, end it immediately. If it’s a phone call, hang up. If it’s an email, do not click any links. You can report suspected any fraud attempts to firstname.lastname@example.org or to the Treasury Inspector General’s IRS Impersonation Scam Reporting
- If someone claiming to be from the IRS contacts you and you think you might actually owe taxes, start by consulting your tax advisor. If you don’t have an advisor, you can verify the authenticity of the contact by calling the IRS at 1-800-829-1040. While your hold time can be lengthy this time of year, it’ll be far quicker than having to resolve tax information theft.
Beyond protecting your own information, it’s important to watch out for the people in your life who might be particularly vulnerable to tax scams — including younger individuals and elderly taxpayers on a fixed income.
The key to protecting yourself from tax-related fraud is to remember that time is on your side. You should always verify any type of communication that tells you to act immediately before you make any payment or share any type of sensitive information. For more details, contact your CRI tax advisor or check out the IRS webpage focused on tax scams and consumer alerts.