Repeat after us: The IRS will never call you demanding money. The IRS will never call you demanding money. The IRS will never call you demanding money...
It’s almost everyone’s favorite time of the year. And by “everyone” we mean tax accountants. Yep, tax season is nearly upon us. Whether you finished filing weeks ago or you’re scrambling to get all your forms together under the wire, it’s important to be aware of the true villains of tax season: the scammers!
Scammers want to take your money and they’re willing to lie, cheat, and impersonate the IRS to do it.
“Throughout the past decade, there has been a significant increase in tax scams targeting thousands of Americans and costing them millions of dollars,” warned David Cawley, CFO at Micah Fraim, CPA. “Scammers use any method they can to prey on unsuspecting taxpayers including mail, telephone, email, and even texting and social media.”
Here’s what you have to watch out for and what you should do to protect yourself!
People fear the IRS, and scammers use that.
It makes sense that scammers would try to take advantage of tax season. There can be significant penalties for not paying your taxes properly, so scammers can manipulate your fears of legal consequences to rush you into giving them money.
“I’m a tax attorney, and I get about a call a week from a panicked taxpayer who thinks their arrest is imminent,” recounted Brad Paladini, of Paladini Law. “Almost all scammers are looking for money—not usually cash but the equivalent, such as gifts cards.”
Steve Weisman, a lawyer, author, and identity theft expert who writes at Scamicide.com, expanded on what the scammers would be trying to get from you:
“The phony IRS calls have two primary purposes. The first purpose is to scare people receiving the phone calls into paying them for alleged overdue taxes through credit card numbers or gift cards. Although it would seem that most people would be aware that the IRS does not accept gift cards, the problem has gotten so big that the IRS has had to publicly pronounce that it does not accept payment by gift cards or iTunes cards which are also asked for in some instances.
“The second purpose of the calls is to trick people into providing their Social Security number and other personal information that can be used for purposes of income tax identity theft and other forms of identity theft.”
What’s the one sure-fire way to spot an IRS scam?
So how do you know you’re talking to a scammer and not a real agent of the Internal Revenue Service? You may think you’re too clever to be scammed, but so does everyone.
“Scammers are adept at appearing credible, such as tricking your caller ID into showing ‘IRS’ or the name of your bank in the ID field,” cautioned identity theft expert and CEO of Safr.Me, Robert Siciliano. “They may have a snazzy website up, a “badge number,” noise in the background to simulate a call center, even a fake accent. Remember, scammers are pros. It’s going to seem legitimate.”
Thankfully, there’s one bit of knowledge that should keep you from falling for almost all IRS phone scams.
“While new technology allows scammers the ability to ‘spoof’ actual IRS phone numbers, the IRS will never call you demanding payment,” explained Leslie H. Tayne Esq., Founder and Head Attorney at Tayne Law Group.
“The first steps the IRS will take if you owe money or if there is a problem with your account will be to send written notices through the mail. The IRS will also never ask for payment via prepaid card or wire transfer. Additionally, the IRS won’t demand payment from you without giving you the opportunity to appeal and wouldn’t call you regarding an unexpected refund.”
But what if they aren’t calling over the phone? What if there’s a flesh-and-blood person claiming to be an IRS agent?
“If someone ever does visit you in person, the IRS representative will have two forms of identification,” advised Cawley, “a pocket commission and an HSPD-12 card, which is a government-issued form for federal employees. Every taxpayer has the right to request these forms of identification and if it cannot be provided, they should not provide any sensitive personal information.”
So what do you do?
So you’ve been contacted by what you’re pretty sure is a scammer pretending to be an IRS agent. What do you do?
“You should never give your personal information over the phone to someone who calls you claiming to be the IRS,” advised Tayne. “Try not to panic, especially if the person at the other end begins to threaten you. Avoiding succumbing to the pressure and hang up. If you’re worried about the state of your account with the IRS, look up the number for your local IRS office and call them directly to check. You should also consider reporting these calls to the Federal Trade Commission, which monitors scams.”
Tax season can already be tough. Don’t let scammers make it even worse for you.
Watch out for your money.
While a tax scammer represents a pretty direct threat to your bank account, there are other financial hazards out there that can leave you with little to no savings.
The solutions to these problems differ a little bit—maintaining a well-stocked emergency fund isn’t quite the same thing as asking for your tax preparer’s credentials—but they aren’t so different either. Do your research, make smart decisions, and always be prepared for worst-case scenarios!
David Cawley is the Chief Financial Officer for Micah Fraim, CPA (@MFraim89) and is a CPA licensed in the state of Virginia. He holds an MBA and Masters’ in Accounting and Finance. David and his firm specialize in business development and have worked with hundreds of entrepreneurs, helping advise them on how to attain the best results for their businesses.
Brad Paladini (@paladinilaw) is a tax attorney licensed in NY, NJ, and CA. He received his Master of Laws in Taxation from the University of San Diego School of Law. He represents individuals and businesses before the IRS and state taxing agencies in collection cases, audits, and international tax disputes. He can be reached at firstname.lastname@example.org or 201-381.4472.
Robert Siciliano (@RobertSiciliano) is a #1 Best-Selling Author and CEO of Safr.Me. Safr.Me is funny but serious about teaching you and your audience fraud prevention and personal security. Robert is a United States Coast Guard Auxiliary Flotilla Staff Officer of the U.S. Department of Homeland Security whose motto is Semper Paratus (Always Ready). His programs are cutting edge, easily digestible and provide best practices to keep you, your clients and employees safe and secure. Your audience will walk away as experts in identity theft prevention, online reputation management, online privacy and data security.
Steve Weisman is a lawyer, college professor at Bentley University and author. He is one of the country’s leading experts in identity theft. His most recent book is “Identity Theft Alert.” He also writes the blog Scamicide.com (@Scamicide) where he provides daily updated information about the latest scams and identity theft schemes.
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