6 Tax Scams You Need to Know

It is your hard-earned money, aren’t you worried?

Scammers seem to be on the rise every year of tax season, hunting for your private information and tax return.

So be informed about what kind of frauds are out there. Union Colony Insurance is up to date with tips provided by the Internal Revenue Service, and we wanted to share the 6 biggest tax scams we know:

1. Phone Scams

The trending fraud on the rise, some people are impersonating IRS agents over the phone and threatening jail time over false tax claims. The scammers are even altering the caller ID to appear as if they are calling from an IRS office.

Not only would an IRS agent never demand or aggressively threaten you, they would never contact you by phone until after direct mailing.

Also, do not call back a number claiming to be the IRS. You can report the call on FTC.gov or call 800-366-4484.

2. “Verify Your ID”

Occasionally, to protect against fraud, the IRS will ask to verify your identification. However, this would only occur after you have filed your taxes, and would ask for this verification in a mailed letter labeled 5071C.

If a website requires you to upload documentation or asks for personal information, it is not a secure website.  

3. Phishing

“Phishing” is when someone creates a fake email and/or website, asking for your private information to help you with your taxes. The emails or landing pages will often claim they are with the IRS and will look very professional.

What victims do not realize is the IRS would never contact you via email, text, or especially social media.

Should you receive what seems like a Phishing Scam, in your inbox report it to [email protected] 

4. “Get a huge refund!”

The financial person that prepares your taxes may not always be looking out for your best interest. A professional tax preparer would never promise huge refunds or charge fees based on the size of your refund.

If you hear these ideas from your preparer, if they ask you to sign a blank check, and/or have no storefront to account for, they are not to be trusted.

5. Fake Charities

Not just during tax season, a common problem after disasters or tragedies is scammers impersonating charities.

The scammers will often have similar names to real organizations, and require financial info or your social security number early in a conversation that should be about helping victims.

With our referral program, Union Colony Insurance is especially cautious about this kind of fraud. We always require a copy of a charity’s 501C3 prior to working with any nonprofit and we encourage you to do the same!

6. False Tax Returns

Possibly the biggest problem the IRS has yet to solve is the result of identity theft: wherein someone files taxes using your personal information to obtain your refund.

The best way to prevent falling victim to this is by protecting your personal data. Check your credit report each year and keep an eye on your social security administration earnings. If you catch any odd changes, address them immediately.

Take precaution

Beyond understanding these big frauds, Union Colony Insurance has a few tips to ensure you do not fall victim to any of them:

1. Keep your important documents in secure places in your home.
2. Use strong passwords for online tax information. Read Lori’s advice for a strong password here!
3. Talk to agency owner Lori Granberg, a Dave Ramsey Endorsed Local Provider, for more tips on staying financially secure.

Do you know of another tax scam we should add? Let us know in the comments!