Tax season is always a busy time for the Internal Revenue Service, but it’s also a prime opportunity for scammers to prey on taxpayers. Tax evasion scams are on the rise, and it’s important to be aware of the red flags so you can protect yourself from falling victim.
What Are Tax Evasion Scams?
Tax evasion scams are a type of fraud that involves tricking taxpayers into giving up sensitive information, such as their Social Security numbers, bank account information, or tax return data. Scammers can then use this information to steal your identity, file false tax returns, or open credit accounts in your name.
How Do Tax Evasion Scams Work?
To help you safeguard yourself against these predatory tactics, let’s delve into the 10 common tricks employed by tax evasion scammers:
1. Impersonating Authoritative Figures:
Scammers often pose as IRS representatives, intimidating victims with threats of audits, fines, or even arrest if they fail to comply with their demands. They may employ official-looking email addresses or spoof IRS phone numbers to enhance their credibility and instill a sense of urgency.
2. Offering Guaranteed Tax Reductions or Refunds:
Tempted by the allure of lower taxes or unexpected refunds, victims fall prey to promises of guaranteed tax reductions or refunds. Scammers may claim to possess insider knowledge or special tax loopholes, directing victims to fake websites or requesting personal information to process their requests.
3. Involving Third-Party Facilitators:
To add an air of legitimacy to their schemes, scammers may involve third-party facilitators, such as tax preparers or software vendors. They may claim to be working with these individuals to provide tax assistance or file returns on your behalf, further blurring the lines between legitimacy and deception.
4. Creating a Sense of Urgency:
Scammers often employ high-pressure tactics, creating a sense of urgency to force victims into making hasty decisions. They may threaten immediate legal action or hefty fines if demands are not met, leaving individuals feeling cornered and susceptible to their manipulation.
5. Exploiting Language Barriers:
Those with limited English proficiency may be particularly vulnerable to tax evasion scams. Scammers may target them with emails or calls in their native language, making them more trusting and less likely to question the legitimacy of the communication.
6. Utilizing Social Media Platforms:
Scammers are increasingly leveraging social media platforms to reach a wider audience. They may create fake accounts with official-looking logos or impersonate legitimate tax preparers, posting enticing offers or misleading information to lure unsuspecting individuals.
7. Posing as Charitable Organizations:
Charity scams are a common tactic during tax season. Scammers may impersonate legitimate charitable organizations, requesting donations for fake campaigns or promising tax deductions in exchange for financial contributions.
8. Disguising as Debt Collection Agencies:
Debt collection scams often arise in the context of tax evasion. Scammers may impersonate debt collectors, threatening legal action or wage garnishment if unpaid taxes are not settled immediately. They may demand personal information or payment over the phone or through deceptive websites.
9. Exploiting Technical Vulnerabilities:
Scammers may send phishing emails or text messages containing malicious links, hoping to trick recipients into clicking on them. Once clicked, these links may redirect victims to fake websites that look like legitimate tax authority portals, prompting them to enter their personal information.
10. Targeting Specific Demographics:
Scammers may target specific demographics, such as elderly individuals or those with limited financial literacy. They may tailor their scams to exploit the vulnerabilities and fears of these groups, making them more susceptible to deception.
What Are Some Red Flags to Look Out For?
Here are some red flags that you may be dealing with a tax evasion scam:
- The caller or sender is demanding immediate payment. The IRS will never demand immediate payment over the phone or in an email.
- The caller or sender is asking for your personal information, such as your Social Security number, bank account information, or tax return data. The IRS will never ask for this information over the phone or in an email.
- The caller or sender is threatening you with legal action. The IRS will only contact you by mail if they have a legitimate reason to do so.
- The caller or sender is offering to help you file your taxes for a fee. The IRS provides free tax help to qualified taxpayers.
How Can I Protect Myself From Tax Evasion Scams?
Here are some tips to protect yourself from tax evasion scams:
- Beware of unsolicited phone calls or emails about your taxes. The IRS will never call or email you to demand immediate payment or threaten you with legal action.
- Never provide your personal information, such as your Social Security number, bank account information, or credit card numbers, to anyone you don’t know and trust.
- Be suspicious of offers that seem too good to be true. Scammers often promise guaranteed tax reductions or refunds in exchange for your personal information.
- File your taxes electronically. Electronic filing is much less likely to be vulnerable to scams than paper filing.
- Use a reputable tax preparer. Reputable tax preparers will never ask you for your personal information or promise you tax reductions or refunds that are not guaranteed.
- Be aware of the signs of a scam. Familiarize yourself with the common tactics that scammers use, such as impersonation, urgency, and technical exploitation.
Where Can I Report Tax Evasion Scams?
As the annual tax season approaches, so does a heightened vigilance against tax evasion scams. These fraudulent schemes, designed to prey on unsuspecting taxpayers, can leave individuals financially vulnerable and emotionally scarred. Reporting suspicious activity promptly can help protect yourself from becoming a victim and contribute to the fight against tax evasion scams.
Key Reporting Agencies
Several organizations are dedicated to receiving and investigating reports of tax evasion scams. Here are some primary reporting agencies:
- Internal Revenue Service (IRS): The IRS is the primary enforcement agency for tax laws, and it provides a dedicated channel for reporting tax evasion scams. You can report suspected scams online at IRS.gov/ReportPhishing or call the IRS Hotline at 1-800-829-1040.
- Federal Trade Commission (FTC): The FTC is a federal agency that protects consumers from fraud and unfair business practices. You can report tax evasion scams to the FTC online at FTC.gov/ReportFraud or call the FTC Consumer Protection Hotline at 1-877-FTC-HELP (1-877-382-4357).
- Internet Crime Complaint Center (IC3): The IC3 is a partnership between the FBI and the National White Collar Crime Center that receives and investigates reports of cybercrime, including tax evasion scams. You can report suspected scams to the IC3 online at IC3.gov or call 1-800-877-IC3 (877-422-7833).
- State Attorneys General: Each state has an attorney general’s office that investigates consumer fraud, including tax evasion scams. You can contact your state’s attorney general’s office for specific reporting instructions.
- Cybersecurity & Infrastructure Security Agency (CISA): www.cisa.gov
Gathering Information for Reporting
When reporting suspicious activity, it is crucial to gather as much information as possible about the scam. This includes:
- Details of the contact you received, such as the phone number, email address, or website address
- The specific information or requests made by the scammer
- Any threats or intimidation tactics used
- The amount of money requested or any financial transactions you may have made
Additional Reporting Options
In addition to the primary reporting agencies, you can also report suspicious activity to:
- Social media platforms: If you receive a scam through social media, report it to the platform’s abuse reporting mechanism.
- Your bank or credit card company: If you have provided personal financial information to a scammer, contact your financial institutions to report the incident and protect your accounts.
- Online reputation management platforms: If you believe your personal information has been used to create fake online profiles, report it to online reputation management platforms.
Community Awareness and Prevention
By reporting suspicious activity and spreading awareness about tax evasion scams, you can help protect yourself, your community, and the integrity of the tax system. Remember, if you are unsure about the legitimacy of a tax-related communication, always err on the side of caution and contact the IRS directly.