IRS Scams (5 Examples + How to Avoid Them)

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The Department of Justice’s Tax Division and the Internal Revenue Service (IRS) usually puts in a lot of effort and dedication to accomplish and deliver on their mandates.

Both the Tax Division and the IRS play crucial roles in maintaining the integrity of the country’s tax system. Unfortunately, amidst these efforts, there’s a shadow lurking – IRS scams and other deceitful schemes that prey on unsuspecting individuals.

IRS scams use impersonations to trick you into giving personal info or money. Scammers intimidate you with fake tax debts or legal threats, demanding immediate payment through phone calls. They insist on payment via prepaid cards, wire transfers, or cryptocurrency.

1) Phone Scams

During tax season, calls from fraudsters pretending to be from the IRS are pretty common.

Have you gotten a call lately from someone saying they’re from the IRS? They might insist you owe taxes and demand immediate payment. They often use aggressive language and threaten arrest, deportation, or license issues if you don’t pay up.

But before you panic, it’s important to know about these scams and figure out if the call is real or fake.

These scam calls can be tricky. The people behind them can make it look like they’re calling from an official IRS number, and they might even know some bits of your personal info, like part of your Social Security number or your birthday.

But don’t fall for it by confirming or giving away more info.

Here are some common types of IRS phone scam calls:

  • Back taxes or penalty calls – The caller pressures you to pay immediately to avoid legal trouble. Watch out for signs like needing to pay in ways that are hard to trace, such as wire transfers or prepaid cards. They’ll rush you to pay right away.
  • Debt collector contacts – Sometimes, the IRS uses debt collectors to get unpaid taxes. If someone contacts you unexpectedly claiming to be collecting for the IRS, be cautious. The IRS website has tips to know if they’re real.
  • Rebate offers –  Scammers might say they’re IRS employees offering a tax rebate, especially targeting older people. They’ll ask for your bank info for the rebate. Don’t share it, as it gives them access to your money.
  • Fake paper check claims – They might say the IRS sent a check that wasn’t cashed and need your bank details to verify. Remember, the IRS only collects your bank info if you put it in your tax return.

2) IRS Phishing Scams

Phishing (as in “fishing for information”) is a scam where fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information that can be used to steal the victims’ identity.

Phishing emails are designed to trick you into thinking these are official communications from the IRS or others in the tax industry, including tax software companies.

These phishing schemes may seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.

Be alert to bogus emails that appear to come from your tax professional, requesting information for an IRS form. IRS doesn’t require Life Insurance and Annuity updates from taxpayers or a tax professional.

Variations can be seen via text messages. The IRS is aware of email phishing scams that include links to bogus web sites intended to mirror the official IRS website.

These emails contain the direction “you are to update your IRS e-file immediately.” These emails are not from the IRS.

The sites may ask for information used to file false tax returns or they may carry malware, which can infect computers and allow criminals to access your files or track your keystrokes to gain information.

Report any unsolicited email claiming to be from the IRS or from a related component, such as EFTPS to IRS via [email protected].

3) Identity Theft Scams

In IRS identity theft scams, fraudsters get hold of personal information like your Social Security number. They use this data to file fake tax returns or claim refunds in your name illegally.

You might not realize you’re a victim until you try to file your taxes and find out that someone else has already done it using your information. This situation can cause a lot of stress and problems as your legitimate tax filing might get delayed or face issues.

These scammers acquire your personal details through methods like phishing schemes, data breaches, or other cybercrimes. Once they have this sensitive information, they use it to file false tax returns or commit fraudulent activities, causing financial harm and potential legal trouble for you.

Dealing with IRS identity theft scams can be distressing. That’s why it’s important to stay watchful. Keep an eye on your financial accounts and credit reports regularly to spot any suspicious activity.

If you suspect identity theft, report it to the IRS and the proper authorities immediately for quick action and resolution. Being vigilant can help protect yourself from these scams.

4) Fake IRS letters or notices

When it comes to fake IRS letters or notices, scammers send you counterfeit documents that appear to be from the IRS. These letters might demand immediate payment for taxes you supposedly owe or threaten legal action if you don’t comply.

They’re pretty convincing, often designed to look official with IRS logos and language that might make you worry about owing money or facing consequences.

These scammers use these letters to intimidate you into giving them money or personal information. These fake letters might seem real at first glance, but there are ways to spot them.

Look for irregularities such as incorrect contact information, misspellings, or demands for payment through unusual methods like prepaid cards or wire transfers.

If you receive a suspicious letter, don’t panic. Instead, verify its authenticity by contacting the IRS directly using their official contacts to confirm if it’s legitimate or a scam. Being aware can help you steer clear of falling into their trap.

5) Tax Preparer Fraud

When you hire someone to help with your taxes, you trust them with your sensitive financial information. But in some cases, fraudulent tax preparers take advantage of this trust.

They might promise you big refunds or guarantee lower taxes, luring you in with these enticing offers. The scammers might manipulate your tax returns by claiming false deductions or credits to inflate your refund.

They do this without your knowledge, putting you at risk of serious trouble with the IRS. You might end up owing penalties or facing legal consequences for the inaccuracies on your returns, even though you weren’t aware of the deception.

To avoid falling victim to tax preparer fraud, take your time when choosing a tax professional.

Do your research, check their credentials, and ensure they have a good reputation. Never sign a blank tax return or documents with false information, and always review your tax return thoroughly before it’s submitted to the IRS.

How To Spot Common IRS Scams

Urgent demands for payment – Scammers may insist on immediate payment for taxes using unusual methods like wire transfers or prepaid cards. The IRS doesn’t demand payments this way.

Threats and intimidation –  Fake IRS calls or emails might threaten arrest, deportation, or license revocation if you don’t pay up. The real IRS doesn’t use such aggressive tactics.

Requests for personal information – Be cautious if asked for personal info like Social Security numbers or bank details through unsolicited calls or emails.

Unsolicited emails or calls – Be wary of unexpected messages or calls claiming to be from the IRS, especially during tax season. Verify their authenticity by contacting the IRS directly using their official contacts.

False promises or offers – Scammers may promise tax rebates, refunds, or special deals to trick you into sharing your personal or financial information. Be cautious of such offers and verify before sharing any details.

Does the IRS Contact Taxpayers?

Yes, the IRS does contact taxpayers! The IRS may reach out to taxpayers via mail, phone calls, or in-person visits to discuss tax-related matters.

They typically use mail as the primary method for most communications, sending notices or letters regarding issues like owed taxes, audit inquiries, or requests for additional information.

It’s important to verify the authenticity of any IRS communication received to ensure it’s genuinely from the IRS and not a scam.

It’s important to recognize that tax season can be a hectic period, and scammers often exploit this time to prey on individuals facing the stress of filing taxes.

Understanding the prevalent schemes employed by fraudsters can empower you to identify and steer clear of potential traps. Being informed about common IRS scams is crucial for safeguarding yourself from falling victim to these deceitful tactics.

Remember, criminals don’t stick to a particular time to carry out IRS scams. They might strike at any moment throughout the year. During tax season especially, scammers can pretend to be the IRS, aiming to snatch personal information for their own gain.

These schemes can come in various forms: emails, phone calls, text messages, and more. Being cautious and aware of these possibilities is essential for protecting yourself.

By familiarizing yourself with what these scams might look like and understanding the methods to report any suspicious activities, you can stay vigilant and reduce the risk of becoming a victim.

Don’t hesitate to report any questionable communications or encounters that seem unusual or fishy. Staying informed and alert is key to safeguarding your personal and financial information from potential scammers.

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