The United States government is funded by our tax dollars. Almost all of us strive to pay whatever is legally due during tax return time. But thieves take advantage of many working Americans each year. These scammers take hard-earned money from taxpayers illegally. The IRS estimates that millions of dollars are lost by Americans each year to tax scammers. How do they work? Here are some common tips to avoid tax scams.

Phone Call Scams

One common scam is the unsolicited phone caller or texter claiming to be from the IRS. They attempt to frighten the taxpayer. They may threaten legal action, garnishment of wages, or seizure of property. They often demand immediate payment by credit or debit card. They may have personal information. They often use fake IDs and altered phone numbers to appear legitimate. Generally speaking, the IRS is not going to call or visit you to demand immediate payment. They'll send you a notification by letter long before that point. They will also notify you that you have a right to appeal. They will not ask for payment card numbers over the phone. They will not threaten arrest by police or federal agencies. One good tip is simply not to answer unsolicited calls or texts. If you do answer, do not give out any personal or financial information. 

Tax Letter or Email Scams

Scammers often use tax letters or emails to run scams as well. They may state they are from the Taxpayer Advocacy Panel or some other official-sounding entity, with information on a refund. These communications are usually phishing scams. They are designed to trick taxpayers into giving out personal and/or financial information. As in any other email, do not click any link! Countless organizations and individuals have been tricked into downloading viruses or malware to their computers by making one thoughtless click. Beware of offers that promise large refunds in preparing your return. These are often unethical "ghost" tax return preparers. They do not have a Preparer Tax Identification Number and do not sign the return. This means the taxpayer is responsible for any misstatement or error. The scammer's goal may not be immediately financial, but instead information that can be utilized to steal your identity. The Taxpayer Advocacy Panel mentioned above does not ever ask taxpayers for financial or personal information. Any communications should be verified by talking with an IRS representative at a number or location you are sure is legitimate, not the one mentioned in the suspect email or letter. Suspected phishing scams should be reported immediately by forwarding to phishing@irs.gov.

An Ounce of Prevention

So beware of scammers of all types. Be very protective of your personal and financial information! File your return early to limit exposure. Report suspected scams. Along with being your best resource for tax questions and accounting advice, your CPA is alert to, and knowledgeable of, the latest tax scams. Certified Public Accountants like Chandler & Knowles CPAs specialize in accounting and tax information. We've spent years gaining the knowledge necessary to help guide your business through the maze of financial and tax regulations. Please contact Chandler & Knowles today for more information on any tax or accounting services.