Love it or loathe it, paying taxes is one of life’s biggest responsibilities. And whenever money is involved, scams aren’t far behind. Let’s talk about the warning signs of common tax scams—so you can keep your money safe— and what to do if you become a victim of tax fraud.
Verify, verify, verify
Let’s say you receive a letter, email, or text alerting you to an unpaid tax bill. What do you do? If the communication is legitimate, the IRS will have a copy of it online, which you can find in your IRS Online Account. You can also contact IRS customer service to authenticate it.
The IRS WILL NEVER:
- Call demanding payment via prepaid debit cards or gift cards
- Send text messages notifying you of a tax obligation
- Threaten to have your driver’s license or business license revoked, or to have you arrested or deported for not paying taxes
- Request a payment payable to any OTHER recipient than the “United States Treasury”
- Ask you to follow a link to make a payment
Five common types of tax fraud:
Charity scams trick victims into providing personal information and/or donations in exchange for fake deductions.
Disaster loss scams and COVID scams make fake claims to get tax relief or deductions for disaster-related or COVID-related losses in exchange for personal information and upfront fees.
Impersonation scammers pose as IRS agents to intimidate victims into paying fake tax debts or providing sensitive personal information.
Unclaimed refund scams claim you have a refund waiting for you, all you need to do is provide some personal information and a small fee to access it.
Social media tax hacks promote outrageous and misleading tax strategies to gain followers, entice victims into sharing personal information, and file fraudulent returns.
Were you swindled?
There are steps you can take if you suspect you’re the victim of a tax scam. First, cease all communication with the scammer and report the incident to the IRS. Forward any phishing emails to phishing@irs.gov. You should also report phone scams, identity theft, tax preparation misconduct, and more to the Treasury Inspector General for Tax Administration. Additionally, consider filing a police report, monitoring your financial accounts, and placing a fraud alert or credit freeze with the three major credit bureaus: Equifax, Experian, and TransUnion.
Stick to the pros
If tax advice seems too good to be true, it probably is—so while SCU can assist you with your banking needs, your best tax advice should come solely from trusted, credentialed tax professionals. Remember, you are responsible for what you file or do not file. You owe it to yourself to select reputable tax advisors you can rely on to ensure your financial well-being and legal compliance. Professional organizations (such as the AICPA for CPAs), financial education websites (like Investopedia.com or Kiplinger.com), or government agencies, such as the IRS itself (irs.gov/newsroom) can be helpful resources for getting started and learning more.