When Sandy picked up the phone, she was surprised with the caller identified himself as being with the IRS. He wanted to talk to Sandy about her tax refund, and asked to confirm her name and address.
But she quickly grew suspicious when he requested her bank account information, so he could “ensure her refund was deposited.”
She didn’t take the bait. Luckily her granddaughter had already shared an article warning about tax scams conducted by criminals posing as IRS agents to get people to surrender personal information or send money. So Sandy knew the IRS doesn’t initiate contact with taxpayers via phone or e-mail-the agency virtually always uses traditional mail for such communications. Sandy was protected thanks to her foreknowledge.
Not everyone is so lucky. Such scams are reportedly on the rise during this tax season, so it pays to be aware of the common forms of fraud that are out there. Clever but unscrupulous scammers know that while many Americans are busily preparing their tax returns, it’s easier to exploit their vulnerable attention with a quick phone call or e-mail requesting information. Before you know it, you may have given up more than you realize.
The IRS recently published its annual list of the “Dirty Dozen” tax scams. Be on the lookout for any of the following:
- Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as scam artists threaten taxpayers with police arrest, deportation and license revocation, among other things.
- Phishing: Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will never send taxpayers an email about a bill or refund out of the blue. Don’t click on one claiming to be from the IRS. Be wary of strange emails and websites that may be nothing more than scams to steal personal information.
- Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest high-quality service. But there are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. Legitimate tax professionals are a vital part of the U.S. tax system.
- Inflated Refund Claims: Taxpayers need to be on the lookout for anyone promising inflated refunds. Be wary of anyone who asks taxpayers to sign a blank return, promises a big refund before looking at their records, or charges fees based on a percentage of the refund. Scam artists use flyers, advertisements, phony storefronts and word of mouth via community groups where trust is high to find victims.
- Fake Charities: Be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations.
Those are only a sampling of the scams to keep an eye out for. For a full account, check out the IRS Dirty Dozen list to learn more.
These scams can target anyone, but it’s particularly a problem for seniors, who are often more vulnerable and isolated. Protecting seniors from the threat of financial exploitation is a priority for SIFMA, and we’ve covered these issues on Project Invested before to raise awareness of the threats.
Communication is the key. If you have a parent, neighbor, friend or loved one who may be vulnerable to scams like these, share these articles with them so that they can be prepared if they get the call.
The same goes for financial industry professionals who interact with the public. It’s a good idea to communicate with your clients about these scams, and to keep an eye out for unusual activity on their accounts. If one of your clients has been targeted for fraud, you may recognize the signs before they do, and can help to protect them against catastrophic losses.
Remember: Knowing about the threat of fraud before it happens can be half the battle. We can’t always stop the bad actors from trying to exploit people-but we can give people the tools to protect themselves.
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