There are ample schemes designed to strip you of your identity or your money, which are perpetrated throughout the year. And while staying alert year-round can be critical to protecting yourself and your finances, it's also important to consider some seasonal schemes you might not be aware of. Tax season, in particular, is the time to avoid some of the most financially devastating scams you'll encounter.
Fraudsters have been increasingly problematic for both the IRS and taxpayers throughout the country in recent years. Although their methods vary, their goals inevitably compromise your identity or your money - or both. You can increase the likelihood of surviving tax season unscathed by reviewing a few of the more pervasive scams to which so many taxpayers have fallen victim.
If there is a problem with your taxes, you'll receive a notice in the mail from the IRS. What you should not expect is a phone call regarding a tax issue. A common scam entails an individual calling, claiming to be from the IRS, demanding you make an immediate payment for a tax debt. This scammer may go as far as threatening you with imprisonment if you don't pay what they claim you owe (another important point to remember, the IRS will not incarcerate you merely for having a delinquent balance). Disregard these types of calls and do not provide any personal information or payment of any kind. If you think you may have a legitimate IRS balance, you can call them directly to find out.
Similar to scam calls, fraudsters will also try their hand at emailing you a fake tax bill. This electronic correspondence can appear genuine, as a savvy scammer will use details such as the official IRS logo or font to try and fool you. Nevertheless, the IRS will not reach out to you via email. If you haven't received a notice in the mail, you should have little reason to worry about a tax problem.
A particularly disastrous tax scheme involves your return being filed by someone other than you. With only a few basic pieces of information, such as your name, Social Security number and address, a fraudster can file a return on your behalf. This return will include bogus income information which will be used to generate a refund, a mistake the IRS will only catch when they review the return months later.
This scam is predicated on the assumption that you'll wait until late in filing season to prepare your return (which will be automatically rejected if a return has already been processed). Not only will you be unable to receive a refund to which you may be rightfully entitled for up to six months, you'll also spend that time straightening the issue out with the IRS. Although increased IRS security methods are being implemented, there is no foolproof way to avoid this type of scam other than filing as early as you can.
Some scammers have already stepped up their game and are brazen enough to send you a phony tax notice through the mail - adding mail fraud to their list of infractions. While you must take any IRS notice seriously, you must also be cautious when being asked to provide personal information or remit payment. Again, the best course of action following receipt of any IRS correspondence is to contact them directly to get more information.
In the event that you get an authentic notice of debt from the IRS, you can't afford to wait to resolve it. While scammers can coerce money from you using insidious tactics, the IRS has legitimate authority to take severe collection action against you. No matter your circumstances, consider consulting with a licensed tax professional to determine a resolution that will be swift and affordable.