As accountants gear up for tax season, so do the scam artists. Tactics range from promises of a faster or bigger refund to threats of arrest or prosecution. The government estimates that scams will cost taxpayers $21 billion this year. Consumer Reports' tax experts tell you how to avoid them.
First, be wary if you get a phone call from someone who sounds like a legitimate IRS agent demanding money. That type of brazen attempted fraud has happened in almost every state. Consumer Reports says the first red flag is the phone call. The IRS usually contacts you first by mail, not on the phone. Still, the imposters can be quite convincing. They often use phony names and IRS badge numbers. They even enlist accomplices who claim to be the police.
If you get a suspicious phone call, contact the Treasury Inspector General for Tax Administration, at 800-366-4484. It may also be appropriate to alert the FBI.
Another type of scam can come through texts and e-mails, which demand confidential information claimed to be missing from your tax return. Those so-called phishing schemes are aimed at getting important information such as your Social Security number. That way the scam artist can steal your identity, then they can claim your refund using a fraudulent tax return.
The IRS does not ask for personal information by e-mail or text, so those too are red flags. If you think you have gotten an e-mail phishing for confidential information, send it to firstname.lastname@example.org.
If you're hiring a tax preparer, Consumer Reports cautions don't fall for too-good to-be-true promises about a big refund or penalty reductions. Look for preparers who will sign your tax return themselves, as well as provide a Preparer Tax ID number. And never allow a refund to go into the preparer's account. It should always be sent to you.
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