Be Careful Out There

Each year the IRS releases its list of most common tax fraud schemes.  The theory is if they show you how unoriginal your tax cheating idea is, you won’t be tempted to try it.  Unfortunately the most common scams actually don’t involve cheating by the taxpayer – they involve fraud that hurts taxpayers. 

The first issue is identity theft.  Someone files a tax return in your name with fraudulent information that nets the criminal a refund.  When the IRS cracks the fraud on the return, they go after the innocent taxpayer who didn’t even know there was a problem.  The IRS says they have active cases against 105 people now in 23 states that involve about $1.4 billion dollars.  The IRS tries to give people a heads up when they get more than one tax return from the same person or if they find wages from an employer who isn’t on the taxpayer’s tax return.  The problem is growing so fast, the IRS has a web page set up to talk about how to handle it if you think you’re a victim.

Next on the list is a practice that I’ve encountered, and warned about previously.  Despite years of warnings, it’s still flourishing.  We had a client who got one of these e-mails last week.  Someone e-mails you telling you the IRS or EFTPS (the website where you file payroll taxes among other things) and says you have a problem and need to contact them right away.  Here’s the IRS advice on this topic.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information.  This includes any type of electronic communication, such as text messages and social media channels.  The IRS has information that can help you protect yourself from email scams.

Last, on the list of top scams that don’t involve active tax payer cheating is a fraudulent preparer.  Needless to say this is a topic that makes me more than a little emotional.  In fact I think it deserves a separate post.  In the meantime I’m going to make sure I’ve shredded any documents I have with someone’s social security number on it.