By Karen Shinn, IT Compliance Director, Penn Community Bank
Tax season is here and Americans are getting ready to file their taxes.
At the same time, criminals are getting ready to target taxpayers with the latest tax-season scams.
The IRS is reminding taxpayers to beware of criminals who use devious tactics to steal money and personal information from unsuspecting victims.
Two Main Types of IRS Tax Scams
Tax scams comes in many forms. The following approaches are most used by fraudsters:
With phone scams, criminals call their victims pretending to be IRS agents and try to get them to divulge personal information such as Social Security numbers, dates of birth, addresses, phone numbers and more. The information collected is then used to steal their identity.
Here is how the scam works. The victim receives an unexpected call from someone purporting to represent the IRS. According to an IRS consumer alert, the caller is likely to demand cash directly from the victim’s bank account or credit card. Or, more likely, the fraudster will tell the victim they have a refund coming and attempt to get them to part with critical personal financial information, like a Social Security number or a bank account number.
In almost all reported cases, the fraudsters alter their caller ID to mirror an actual call from the IRS. They will use bogus names and titles and offer to provide equally fraudulent IRS employment identification.
The IRS offers the following tips and guidance to avoid falling prey to such scams:
- The IRS will never call to demand immediate payment, nor will agents call about taxes owed without first having mailed you a bill.
- The IRS will never demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- The IRS will never require you to use a specific payment method for your taxes, such as a prepaid debit card.
- The IRS will never ask for credit or debit card numbers over the phone.
- The IRS will never threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
If you get a phone call from someone claiming to be from the IRS and asking for money, take these action steps:
- Call the IRS immediately at 1-800-829-1040. If there’s a problem with your taxes, an IRS staffer can help you work it out. If there’s no problem, they’ll tell you that, too.
- If you’re certain you don’t owe taxes and don’t have any tax problems, report the phone call scam to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484 or at www.tigta.gov.
Phishing emails are considered to be one of the top tax fraud schemes by the IRS. In this scheme taxpayers receive bogus emails that try to get them to click on bogus links that will take them to fake IRS websites. These websites are dangerous; they are designed specifically to steal your personal data. Such phishing scams also may include attachments that, when opened, can cause damage to your device and steal your data at the same time.
These malicious emails will often say:
- You’re entitled to a tax refund and must click on a link to access your information and claim your refund.
- Your bank account or credit card has been compromised but you can fix the problem by clicking the link to an IRS website.
As with phone scams, the IRS will never reach out to you via email to request personal financial information. The agency uses only mail, and often certified mail, to contact taxpayers. If you see an email from someone pretending to be from the IRS, ignore it and definitely don’t open any attachments. You can steer suspicious phone calls, faxes, text messages and mailed letters to firstname.lastname@example.org.
Other Scams to Watch Out For
Harvesting Information from Hotspot or Public Wi-Fi Networks
Anyone can harvest your data on a public Wi-Fi network. Don’t file your taxes from Starbucks or McDonalds. Don’t bank from there either. If you are a professional who works with sensitive data, use a VPN if you need to work while traveling. Then, when you log in from the airport or the coffee shop, you have safeguarded the information you are accessing.
Tax Preparers Getting Hacked
Because there are more robust identity theft filters in place, criminals are specifically targeting tax professionals with phishing emails posing as the IRS or software companies. The IRS warns that fraudsters are working to hack into CPA and tax preparer computers to steal their client information. All financial professionals need to have good cybersecurity installed and working to keep out intruders. In addition, there are programs that will automatically log you out if you step away from your computer for a few minutes — this is much safer than leaving the data open and available on your computer.
Fake Tax Bills Through the Mail
Even though most IRS contact with taxpayers is through the mail, some mail might be a scam. The IRS will generally contact taxpayers by regular mail before any other contact is made, and even that can be suspicious, because a growing scam involves fraudsters sending out phony tax bills through the mail on what looks like official IRS letterhead. If you think you don’t owe any tax or don’t owe the amount shown on the bill, be careful not to fall for this scam. You should check with the IRS before paying any bill that looks suspicious.
File Early to Avoid Scammers
File taxes early to prevent scams, and choose to have any refund you might receive deposited directly into your personal savings or checking account. Many of these scams rely on you not having filed your tax return yet, so if you get an email asking to file your taxes after you’ve already done so, you can be sure it’s a hoax.
It is a race to between you and the fraudsters – and if they win, they end up with your money.