Here’s How to Make Sure You Don’t Fall for the Latest Tax Scam

You know never to respond to a phone call from the IRS, because — say it with me — they never call. Well, this latest scam has been taking taxpayers for a ride.

True or False: The time for IRS-related swindles and scams is behind us — until next tax season. If you’re still reading this, you probably guessed “false.” And yep, it’s sad but true: Those pesky swindlers are still at it.

Normally, when summer arrives with its parade of warm days and fewer demands on our attention, there is a quiet month or so when very little happens in the way of IRS-related activities (quarterly payments being the only thing you might expect on a list of tax-related things to do). So, you should be safe from the current scam making the rounds — but you’re not. The IRS recently issued a warning about a scam that’s been luring summertime tax-fraud victims.

You know never to respond to a phone call from the IRS, because — say it with me — they never call. (The agency does have debt collectors representing them now, but you’ll receive several notices before they call you and you can expect to be contacted by one of four firms —CBE Group, ConServe, Performant and Pioneer Credit Recovery — not an IRS agent, more on this below.) Well, this latest scam put a saddle on that old nag and has been taking taxpayers for a ride.

Here’s how: You get a call from the IRS telling you about official correspondence sent via snail mail — certified mail, no less. The letters were returned to the IRS as undeliverable. They tried to mail you the notice you needed. They have to call you.

So, what do you do? Hang up.

The thing about these scams is that they always have the ring of truth to them. (Remember, con man is short for confidence man.) If you stay on the phone, you will be informed that there was an issue with your tax return and you owe money that is extremely late in getting where it’s supposed to be. You have to pay with a card that is connected with the Electronic Federal Tax Payment System (EFTPS). Sounds legitimate, because the EFTPS is one of the ways you can pay your taxes. That said, you can’t do it with a gift card or any other kind of prepaid card, which is what the scam requires to pay out the fraudster. (You can also pay taxes with credit cards, which you can learn about here.)

The IRS never calls to bird-dog money, although there is one new exception. Congress has mandated that the IRS hire collection agencies to chase certain extremely delinquent taxpayers. If you receive such a call, get off the phone and contact the IRS directly to verify the situation.

Also bear in mind that taxpayers who owe the IRS money generally know it. They have received multiple notices, did not dispute the assessments and/or did not make the payments. If you get a surprise call asking for money, be doubtful. (You can see how unpaid taxes are impacting your credit by viewing two of your credit scores for free on Credit.com.)

Can You Scam-Proof Yourself?

In this particular instance, you actually can avoid getting got 100% of the time. It’s pretty simple: Simply hang up. But there is no way to absolutely scam-proof yourself.

There are more ways to get burned by tax scams than you can shake a beach umbrella at — bogus tax preparers, scam artists who file a tax return using your identity and steal the refund, sleazeballs who promise huge tax refunds for an extra fee, which is nothing compared to the penalty you will pay after the IRS audits you.

My book Swiped: How to Protect Yourself in a World Full of Scammers, Phishers, and Identity Thieves provides countless stories about how cyber criminals lure victims, but the best way to stay safe is to do what you’re doing now: Stay aware.

Image: AleksandarGeorgiev

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Why Tax Collection Scams Are Getting Harder to Stop

Sad but true: The IRS is selling debt to collection agencies, so you've got be extra-careful now that tax season is over.

I’ve written about tax-related crime for years, and have always offered this fail-safe rule to avoid tax scams: If you ever receive a call from the IRS about back taxes or any other money you supposedly owe the government, hang up because it’s a scam.

There was something comforting about that advice — maybe even a little satisfying. I mean, who secretly doesn’t want to hang up on the taxman? But it seemed no amount of repetition was enough to stem the tide of tax-related scams, and no matter how many times I wrote about that simple, satisfying tactic, the message never reached the people most vulnerable to such shenanigans.

Taxpayers still got taken in by scam artists dialing for dollars every day. It didn’t matter if the crook posed as an IRS employee, or if he ventured into the truly absurd with a claim that he worked for a collection agency that bought back tax debt from the agency. It was wacky stuff, the IRS selling debt. But it was wackier than that …

All you had to know was this: The IRS did all its own collecting, and it conducted all its business via snail mail. It never called. The advice was solid: Let your spirit fly! Do or say whatever you want when the IRS called about back taxes or an audit because it wasn’t them!

You know where I’m going with this, right? Yep, leave it to our friends in Washington to take a bad situation and make it worse.

Earlier this month, IRS chief John Koskinen announced that the IRS would be immediately outsourcing certain debt collection activities to one of four debt collection companies: CBE Group of Cedar Falls, Iowa; Conserve of Fairport, New York; Performant of Livermore, California; and Pioneer of Horseheads, New York.

You read that right. The IRS is outsourcing debt to collection agencies.

When this was initially announced last September, I was convinced that it was a joke—and a pretty good one. Extra points for coming up with something more or less unthinkable— since truly, debt collection agencies could not be a more problematic solution to the IRS’s back tax problem — but it turns out it wasn’t their joke.

You can thank Congress for this epic face palm. Although it didn’t get much attention when it passed in 2015, one of the provisions of the Fixing America’s Surface Transportation Act required the IRS to hire private-sector debt collectors to pay for it.

Since consumers are going to have to handle this year’s post-tax season a little different as a result, here are some telltale giveaways that you’re getting scammed and should hang up:

  1. You get a call from a collection agency not listed above. Only those four agencies are approved for these collections.
  2. You do not owe back taxes.
  3. The person calling you has asked you to send money somewhere other than the IRS. Even though the four collection agencies are making the call, the check goes to the Fed.
  4. The caller asks you to pay in the form of gift cards, prepaid cards or asks you to wire funds.
  5. The caller is aggressive or rude — a violation of your debt-collection rights.
  6. You are asked for any information that can be used to conduct a financial transaction: Social Security number, bank account, credit or debit card number. (If you do turn over personal information, keep an eye on your credit for signs of identity theft. You can view your free credit report summary on Credit.com.)
  7. If you are low-income, there may be other options for you. Contact the IRS to find out what they may be before discussing your debt with a collection agency.

By now we’ve gotten pretty good at surviving the ridiculous decisions made on Capitol Hill, but this latest one is a doozy. Happily, my old advice still stands. If you get a call from a debt collector, don’t engage until you verify the debt. If it was a legit collector, they’ll furnish written verification within five days of calling you, and here’s what to do when that happens.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Image: MartinPrescott

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Tax Season Is Over … But You Can Still Get Scammed

track scams

It’s the scam that just keeps going, and even though tax season’s over, it shows no signs of stopping. What is it, you ask? The Internal Revenue Service telephone tax scam and, if you’re not careful, you could become its next victim.

Here’s how it works: A scammer calls, claiming to be an IRS agent or from another agency, such as a state motor vehicle registry, and says you owe taxes and better pay fast — or face the consequences.

According to CBS, which covered the scam this week, callers can “spoof” caller ID services to make it look like they’re calling from a real agency. They will also likely do their homework on victims (typically online) to make it seem like they know to whom they’re speaking. Worse still, they’ll use official-sounding IRS titles and badge numbers to identify themselves.

The scammer will demand payment via an online service or debit card, telling victims to hit the bank or convenience store. More intrepid scammers have even gone so far as to copy IRS letterheads and contact victims via snail mail or email. They’ll provide a real IRS address, but ask for the payment to be sent to the agency.

How to Handle It 

So what should you do if you find yourself on the receiving end of one these calls? Hang up. The IRS will never contact you by phone, and if there’s an issue with your taxes — say, failing to complete a 1099-C form or claiming weird deductions — you’ll be sure to hear about it the old-fashioned way, by snail mail.

If you think you owe taxes, or don’t know where you stand, your best bet is to go straight to the source by contacting the IRS directly. And rest assured, if you owe money but can’t afford to pay, the IRS will be willing to work out an installment agreement.

Don’t forget, your taxes can affect your credit score if you’re not careful. If you’re worried about how unpaid taxes could already be impacting your credit, you can get your two free credit scores, which are updated monthly, on Credit.com. You can also check your free annual credit reports for tax liens as well, which will signal a real tax problem.

More on Income Tax:

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Tax Email Scams Are Up 400%

tax-email-scams

Filers beware: There’s a good chance there’s a tax scam email in your inbox.

According to the Internal Revenue Service, there’s been an approximate 400% surge in phishing and malware incidents so far this tax season. In other words, plenty of thieves are currently sending out texts and emails under the guise of the IRS or other tax industry players this year. These messages are an attempt to steal personal information or data related to your tax refunds, filing status, transcripts and/or PIN information either directly or through malware that gets downloaded onto your computer when you click on infected links. The information can be used to file false tax returns.

“Watch out for fraudsters slipping these official-looking emails into inboxes, trying to confuse people at the very time they work on their taxes,” IRS Commissioner John Koskinen said in a consumer alert re-issued earlier this week. “We urge people not to click on these emails.”

Tax Fraud on the Rise

The IRS’s findings aren’t exactly surprising. The agency announced earlier this year that it’s anticipating $21 billion in tax refund fraud this year. And, just this month, Intuit warned consumers that a fake TurboTax email was making the rounds. Still, the stats should inspire everyone to be a little more careful about what they click on this tax season. Per the agency’s latest consumer alert:

  • There were 1,026 incidents reported in January, up from 254 from a year earlier.
  • The trend continued in February, nearly doubling the reported number of incidents compared to a year ago. In all, 363 incidents were reported from Feb. 1 to Feb. 16, compared to the 201 incidents reported for the entire month of February 2015.
  • This year’s 1,389 incidents have already topped the 2014 yearly total of 1,361, and they are halfway to matching the 2015 total of 2,748.

How to Spot a Tax Scam Email

Fortunately, there are a few simple ways to spot a tax scam email. For starters, be extremely skeptical of any emails purportedly from the IRS. The agency says it generally does not initiate contact with taxpayers by email regarding personal or financial information. Be similarly wary of emails that ask you to update important tax information by clicking on a link. (Recent scam emails the IRS has come across included the subject lines referencing “Get my E-file Pin”, “Order a transcript” and “Get my IP Pin”.) And look for typos or misspellings in the body of the message — they’re a big sign something is amiss.

If you do receive a shady email, refrain from clicking on any line and, instead, forward it to phishing@irs.gov.

Remember, filing your taxes as early as possible is the best way to minimize the odds of falling victim to taxpayer identity theft. But, if you have reason to believe your personal information was compromised, you should keep an eye on your credit. A sudden drop in credit scores is a sign your identity has been stolen. You can monitor your standing by viewing your two free credit scores each month on Credit.com.

More on Income Tax:

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Consumer Watchdog: The IRS Reveals Dirty Dozen Tax Scams

Tax return check

Updated for 2016

Tax time is high season for scams and identity theft. In fact, tax-refund fraud is expected to hit $21 billion this year. We’ve alerted you to some of the tactics crooks use during tax season like pretending to call as an IRS agent demanding payment, email scams saying your tax payment got rejected or that you owe back taxes, or simply stealing your W2 then filing your tax return and routing your refund to another bank account. The IRS also has its own list of 12 scams used to part you with your hard-earned money (or that they think you might be tempted to do).

We want you to be aware of every way a thief might try to take advantage of you during the often frustrating and trying time of filing taxes.

Here are the Dirty Dozen tax scams from the IRS:

1. Phone Scams

This scam is the most prevalent way a crook will try to use tax time to get your money. A fraudster will call you impersonating an IRS officer claiming you owe more money (or back taxes) and need to pay it now or risk being arrested, deported, getting your driver’s license revoked or whatever clever scare tactic he can come up with. Stay calm, never give out personal information and immediately hang up and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484 and file a complaint using the FTC Complaint Assistant (choose “Other” and then “Impostor Scams”).

[Learn how to protect yourself from tax scams here.]

2. Phishing

If it smells fishy, it probably is! The IRS won’t send you an email out of the blue about a refund or back taxes. In fact, first contact from the IRS almost always still comes via snail mail and not email or phone. If you get an email claiming to be from the IRS, don’t click any links until you contact the IRS directly to confirm it’s valid. The crooks are looking to steal your personal information.

[Read more about how to protect against Phishing Scams here.]

3. Identity Theft

Getting your identity stolen at any point during the year is a major hassle and could be costly. But getting your identity stolen at tax time is probably because a crook is filing for a tax return using your name and getting your refund first (or a fake version of your refund). One of the best ways to defend against this is to file your taxes as early as possible. Also be sure to track all your W2 or 1099 forms and reach out to an employer immediately if you haven’t received your forms by early February. Crooks are not above stealing your tax forms and using them to file.

[Learn how to prevent and deal with identity theft here.]

4. Return Preparer Fraud

Looking for a good deal is great, but don’t go to cheap tax preparer (accountant) if he or she isn’t credible. Do your due diligence before giving over all your personal information to an accountant. Unfortunately, some of them use tax season as a chance to steal people’s identities.

5. Offshore Tax Avoidance

This one is on you. Don’t hide your money offshore, because you’ll be paying big time when Uncle Sam tracks it down. You can voluntarily admit to having an offshore account (even if you had one by accident – perhaps while working internationally) through the Offshore Voluntary Disclosure Program.

6. Inflated Refund Claims

It’s fine if a tax prep software company promises the biggest return compared to competitors, but don’t trust anyone claiming to get you an inflated refund. Never sign a blank return and be wary of anyone promising a big return without even looking at your information. Also, don’t agree to pay fees based on a percentage of a refund. This scam is typically perpetuated via word of mouth, flyers in storefronts and targets community and church groups.

7. Fake Charities

Check out any charity before donating. This is good practice year-round, but fake charities become especially popular during tax season to prey on people receiving refunds. Use tools like GuideStar.org to see if a charity is legit.

8. Hiding Income with Fake Documents

Much like hiding money offshore – this tax scam is on you to avoid. Don’t attempt to fake taxable income by filing false Form 1099s or other documents to inflate your tax refund. You are legally responsible for what is on your returns, regardless of who prepares them.

9. Abusive Tax Shelters

The IRS is committed to cracking down on abusive tax structures/ tax avoidance schemes and persecuting people who create and sell them. Be wary of anyone pushing tax shelters that sound like a great deal.

10. Falsifying Income to Claim Credits

Just report what you’ve earned. It’s really basic. Falsifying your income in anyway will not end well for you, no matter what a con artist tells you.

11. Excessive Claims for Fuel Tax Credits

Some prepares may try to talk you into making a fuel tax credit claim on your return. Be wary! The fuel tax credit is generally limited to off-highway business use, typically for farming. If you aren’t a farmer, it’s doubtful this tax credit is for you.

12. Frivolous Tax Arguments

Yes, you have the right to contest your tax liabilities in court. But don’t let a scam artist sell you snake oil. Often times frivolous tax arguments not only fail to hold up in court but filing a frivolous tax return results in a penalty of $5,000.

Be sure to check out the Dirty Dozen tax scams directly on IRS.gov and contact the IRS and FTC directly if you believe you’ve been a victim of a tax scam.

Think You’re a Victim of a Tax Scam?

Scams need to be reported immediately to the Federal Trade Commission (FTC). You can also hear an example of a scam IRS call here.

The post Consumer Watchdog: The IRS Reveals Dirty Dozen Tax Scams appeared first on MagnifyMoney.

Watch Out for Fake Turbo Tax Emails

credit report errors

Scammers are targeting taxpayers by sending TurboTax customers fake emails designed to steal people’s personal and account information, according to a Feb. 4 announcement by Intuit, the parent company of the do-it-yourself tax software.

Intuit said the email mimicks the company’s brand and tells recipients they need to confirm their accounts. Here’s what part of the email says, according to a screenshot on Intuit’s website.

“Some information on your account appears to be missing or incorrect! Please confirm your information promptly so you can continue to enjoy all the benefits of your TurboTax account. If you don’t confirm your information, we’ll limit what you can do with your TurboTax account.”

The email is a phishing attempt — phishing tricks people into handing over sensitive information to thieves, usually by imitating a trusted company — and it’s well-timed. Many people have already filed or are about to start the process of filing their taxes, which could motivate concerned customers to make sure their TurboTax accounts are up to date.

If you look closely, the email has hallmarks of a phishing scam: There are some typos, and when you hover over the “Sign in to TurboTax” button in the email, it’s clear the URL is not legitimate. Always be careful about clicking on any emails that ask you to share account or financial details. Doing so could cause you some serious headaches.

Depending on the information people share, the thieves can commit a variety of serious offenses, from credit card fraud to identity theft. Taxpayer identity theft is obviously a concern in this scenario, because giving a thief your tax-software credentials could allow them to file a fraudulent tax return and delay your refund. You can protect yourself from taxpayer identity theft by filing your tax return as soon as possible, before someone with your personal information beats you to it.

Intuit is asking that anyone who receives these emails not click on any links or open attachments, send a copy to spoof@intuit.com and then delete the email. As always, it’s important to monitor your credit for signs of identity theft, especially after encountering something suspicious. (You can do so by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com.)

More on Identity Theft:

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