Don't Fall for Tax Scams!
Updated: Oct 16, 2019
They almost got me! I read stories of people who fall victim to the Nigerian prince scam, or who buy iTunes gift cards to pay off non-existent debts and wonder how they could let their guard down so easily. Then it almost happened to me. Not long after making a purchase on Amazon (for which I received a valid email with purchase and shipping details), I received an email purportedly from Amazon “verifying” a purchase for something I’ve never shopped for, at an amount well above what I had spent on my real transaction. Concerned about an erroneous charge, my instinct was to click on the embedded link to see what was going on; fortunately, I remembered to let my cursor hover above the email address and saw the actual sender was not Amazon at all, but rather some random person I’ve never heard of. Scam narrowly averted!
October is National Cyber Security Awareness month, making this a good time to review some of the basic safeguards taxpayers should take with their tax returns and related matters. Although the IRS says the number of reported cases dropped 72% from 2015 to 2018, tax identity theft remains a concern. Each year thousands of tax returns are filed with false identity information, resulting in millions of dollars in fraudulent refunds. That’s why the IRS has partnered with state tax agencies, software companies, financial institutions, and tax professionals to create the Security Summit, a coalition with an ongoing mission of fighting back against cyber criminals.
With the average person receiving 16 malicious emails a month, the most obvious step is to remain vigilant when opening emails. With more of us becoming aware of the old tricks, scammers are continually evolving new tactics. “Phishing,” or pretending to be a trusted source in order to get personal information, has expanded into “spear phishing,” where the imposters research the intended victim to make their appeal seem more personal and therefore more believable.
Emails promising unexpected refunds, demanding unexpected amounts due, or warning that you’ve been the victim of tax identity fraud are all signs of a scam. Likewise, overly aggressive language or demands for a specific form of payment are clues that the communication is not legitimate. And the IRS will not threaten to send local law enforcement to arrest anyone, demand payment without explaining why the taxpayer owes, or ask for credit or debit card numbers. (I’m sure we don’t need to remind you that whole iTunes card thing is a scam!)
If the IRS wants to communicate with a taxpayer, they will mail a letter outlining the reason for the communication. Though many such letters can be handled through written correspondence, the initial letter will have a number the taxpayer can call to discuss the matter with an IRS representative. The IRS does not phone taxpayers unless this process has occurred. Of course, we are happy to assist any client who needs to respond to a tax notice.
While it’s true that the IRS is now contracting 3rd party collections agencies to collect taxes owed, taxpayers are notified by mail that their account is going into collections, and they are given information about the company that will be trying to collect on their account. Whether dealing directly with the IRS or a 3rd party collections firm, all tax payments are made to the U.S. Treasury. Being told to remit funds otherwise is a sure sign that something is amiss.
At Down South, we take our responsibility to protect clients’ information very seriously. We have an IT team that monitors our systems to keep our computer defenses strong and our processes up-to-date. We have a portal system that allows us to securely exchange documents with clients so sensitive information does not have to be emailed. We stay current on news from the IRS and industry sources on new threats and how to steer clear of them. We strive to make our clients feel safe when entrusting us with their personal information.
National Cyber Security month is a great time to make sure we’re updated on avoiding tax scams. Unfortunately, I haven’t figured out how to quit falling for Amazon’s Deal of the Day!