Tax Refund Scammers: Tactics To Avoid and Tips To Follow

Taxes are oftentimes considered by many as a financial burden. In reality, it is somewhat affirmative. It is an individual’s legal obligation to the government where they belong to. Yes, no one likes paying taxes. It has been a common desire to get away with taxes. There are some people who actually believe that federal income taxes are a scam. This belief has been used by a con artist to their advantage in advancing tax scam. The income tax is a fertile ground for scammers.

Awareness of Fraudulent Tactics

Recently, Internal Revenue Service (IRS) released a list of dirty tactics used by tax scammers that must be watched out:

• Phishing. It refers to fake emails claiming to be an IRS agent and telling you to claim your tax refunds. Then asks for personal information and bank account details. Watch out for they are impostors who are after your bank account details. Avoid giving the information. Take note that IRS never contact taxpayers through email for information.

• Phone Scam. A caller will represent the IRS, then threaten you with police arrest, deportation, or revocation of license or institution of a criminal action. These liars will demand immediate payment of cash via wire transfer or prepaid debits. It is best to hang up and report the call to IRS. IRS will not call to demand payments.

• Identity Theft. The scammer will use your government issued identity number (Social Security number or taxpayer identification number) and try to access your tax refund and pocket your refund.

• False Charities. Scammers will target taxpayers who might want to make tax-free donations. If you want to donate, it is best to use check or credit cards and avoid giving cash. Also, avoid giving personal information such as Social Security number or passwords. You can verify with IRS the authenticity of the chosen charity.

• Beware of fraudulent tax preparers. They tend to pose as legitimate professionals. Most of their victims are those that are not familiar with US tax system or do not speak English well. And they take a huge fee for their services. It is better to ask for a referral from someone you trust or search from Federal Tax Return Preparer directory.
• Offering Offshore accounts. IRS is on the lookout for these institutions and wealthy business people who move their money overseas to keep their financial accounts. Hiding money is not easy, you will face penalties and criminal prosecutions.

• Avoid taxes through a tax shelter. Tax-avoidance scheme is actually illegal and scammers promise to help an individual to evade tax liabilities by hiding assets. It is done through financial instruments such as a trust or captive insurance. If uncertain about the financial product ask for an opinion prior getting into it.

Tips on How to Detect a Tax Scam

• In the above-mentioned tactics will create pressure on the taxpayer which will push them to act quickly. They will ask you to make a quick decision and telling you that, ”If you don’t act now, you’ll miss out”. This is the goal of the scammers, to push you to act without taking time to think. If a legitimate IRS agent contacted you, they will give you a chance to ask questions or appeal. IRS will contact taxpayers through the mail, not by email or phone call.

• These scammers will demand money or say that you have a refund. If the mode of payment asked was through wire transfer, prepaid card or other non-traditional payments – these methods are untraceable and nonreversible. In the US, after reaching out by mail they will call you about your outstanding liabilities and will never demand the mentioned form of payments.

• In tax identity theft, it can be avoided by filing your taxes as early as possible. Before filing a tax return, you can get a six-digit Identity Protection PIN from IRS. You will provide IP Pin yearly when filing for federal tax returns. The IRS will provide IP pin online and the new IP pin will be sent to you each December by postal mail.

• If a caller threatens you for an arrest or to sue you, it is proper to make a call to IRS workers to verify the tax debts. You may report the incident to the Treasury Inspector or file a formal complaint.

• Lastly, if you are uncertain about the call, message or the email, better hang up, do not reply or, delete it and ask for opinion and pieces of advice.