(CHICAGO) — With new tax code changes, the public must be extra careful to avoid scams when filing taxes this time. As tax season opened Monday, the Better Business Bureau warns the public about elaborate schemes con artists will use to steal your money, bank account, and personal identity information.
“We expect tax scammers to be especially aggressive this year,” says Steve J. Bernas, BBB president and CEO. “They will come out of the woodwork to cash in on you.”
It can be nerve-racking to prepare to file with the IRS. Fraudsters capitalize on the pressure taxpayers are under. Working their scam, con artists often start with fear, utilizing imposter phone calls, texts, emails, and phony letters that play on their target’s emotions.
According to the Internal Revenue Service (IRS), taxpayers lost $5.5 billion due to tax scams and fraud in 2023.
What to look out for:
Tax Identity Theft occurs when a scammer files a tax return using your social security number and collects your refund. Scammers steal your tax information in several ways. It could be a phony tax preparation service, a data breach, a hack, or a phishing scam, where you are tricked into clicking on a link in a text message that downloads malware to your device.
Victims of tax identity theft typically don’t realize they’ve been targeted until they file their taxes or even later.
Email Phishing Scams appear to be from the IRS and include a link to a bogus website that mimics the official IRS website. These fraudulent emails direct you to update your IRS e-file immediately, or report a problem with your taxes and sometimes mention USA.gov or a variation of the real IRS site. Scammers want you to call the fake number in the email or click on a link to steal money and ID information.
IRS Impersonation Scams most often start with a phone call and take two basic forms. In the first version, the IRS “agent” says you owe back taxes and pressures you into paying by prepaid debit card or wire transfer. The scammer threatens you with arrest and fines if you don’t comply. Scammers can also claim they are issuing tax refunds and need your information.
The scammer might even give a fake badge number and name or use a spoofed Caller ID that looks like it’s coming from an official agency.
Scammers usually try to push you into action before you have time to think and often insist that payment be made immediately by wire transfer, prepaid debit card, or other nontraditional payment methods, which are mainly untraceable and nonreversible.
“Ghost” shady tax preparers set up shop in your neighborhood around tax time, usually in a vacant storefront. They will often promise tax filers fast or large refunds. These “ghost” tax preparers can be individuals who bypass checks and balances in the tax preparer certification system. If problems arise, they vanish leaving you with lost refunds, high fees and no support.
BBB Tax Time Tips:
• Check out businesses before you hire them and a great place to start is at BBB.org.
• The best way to avoid tax ID theft is to file your taxes as early as possible before a scammer has the chance to steal your information and file a fake tax return.
• Always check out a new tax preparer before you do business with them. Visit BBB.org for ratings and reviews.
• Ask any tax preparer what security steps they will take to protect your data.
• Check out websites carefully and make sure you access the actual IRS website when filing your taxes electronically or inquiring about additional information.
• When in doubt, contact the IRS directly to verify any contact, not a number in an email or text.
• The IRS will never threaten you, demand immediate payment, require a specific form of payment, or ask for credit card or debit card numbers over the phone.
• Be wary of a tax preparer offering fast refunds or large returns. What you owe is solely based on your past year’s tax information and the current tax laws.
• Only allow funds to be deposited into your personal accounts. Some ghost tax preparers will have funds deposited into their own accounts “to be later distributed.”
• Review your tax return before it’s submitted to ensure it was correctly signed by your tax preparer.
• Be wary of spectacular promises. Avoid tax preparers who offer “refund anticipation loans” as you’ll probably lose a large percentage of your return to commission fees.
• Think about availability. If the IRS finds errors in your tax forms or decides to perform an audit, will your tax preparer be available to help you with the details?
• Contact the IRS immediately if you get: a written notice from the IRS about a duplicate tax return, a notice stating that you received wages from a company that you never worked for, or any notice that “additional taxes are owed, the refund will be offset, or a collection action is being taken against you.”
• Protect your Social Security number (SSN). Do not give out your SSN unless you are 100% sure you are dealing with someone you trust.
