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Tax Scams to Avoid

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Don’t fall victim to tax scams! Remember that if it sounds too good to be true, then it probably is.

Here are some of the recent 2014 tax scams the Internal Revenue Service wants you to be aware of:

(1) Identity Theft

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.

The Internal Revenue Services’s work on identity theft and refund fraud continues to grow, touching nearly every part of the organization. For the 2014 filing season, the IRS has expanded these efforts to better protect taxpayers and help victims.

Taxpayers who believe they are at risk of identity theft due to lost or stolen personal information should contact the IRS immediately so the agency can take action to secure their tax account. Taxpayers can call the IRS Identity Protection Specialized Unit at 800-908-4490. More information can be found on the IRS special identity protection page at http://www.irs.gov/uac/Identity-Protection.

(2) 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 where callers say the victim owes money or is entitled to a huge refund. Some calls can threaten arrest or threaten driver’s license revocation. 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.

Common characteristics of these scams can include:

  • Scammers using fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
  • Scammers may be able to recite the last four digits of a victim’s Social Security Number.
  • Scammers “spoof” or imitate the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
  • Victims hear background noise of other calls being conducted to mimic a call site.
  • After threatening victims with jail time or a driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

In another variation, one sophisticated phone scam has targeted taxpayers, including recent immigrants, throughout the country. Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting.

If you get a phone call from someone claiming to be from the IRS, there are some steps the IRS recommends that you follow to ensure that your accounts and information remain safe.

a. If you know you owe taxes or you think you might owe taxes, call the IRS at 800-829-1040. IRS representatives at that line can help you with a payment issue – if there really is such an issue.

b. If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 800-366-4484.

c. If you have been targeted by these scams, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at www.FTC.gov. Be sure to add "IRS Telephone Scam" to the comments of your complaint.

(3) 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 phishing@irs.gov.

A good rule of thumb to follow if you receive a notice, call or email is to contact the entity or organization directly to inquire as to whether you owe money. NEVER give out any personal information to someone who calls you on the phone if you don’t know the person. If you are unsure or suspicious, tell the caller you will need to call him/her back and ask for a phone number, then call the IRS. If they won’t give you a phone number, that is a red flag. If they do provide a phone number be sure to pass it along to the IRS when you call to inquire about the veracity of the call.

If you receive a suspicious email, DO NOT open any links or attachments. Phishing emails are usually populated with links or attachments that will corrupt your computer and cause major problems for you. Again, if you are not sure if an email is legitimate, contact the company, organization or person that sent it to verify if it is a real email. It may take a few extra minutes to do this, but think of the time and aggravation you will be spared by not having your hard drive corrupted and your files destroyed.

Sadly in today’s world of pervasive scams, we all have to take extra measures to protect our identities and our financial information. The more wary and vigilant you are about protecting your information, the more likely it is that a scammer will leave you alone and move on to an easier target.

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