In the convenient spirit of Halloween, it seems appropriate to indulge in a little exaggeration to underscore a pervasive American horror: tax scams. While you’ve probably heard passing stories of unsuspecting taxpayers being duped or falling victim to identity theft, you may not be aware of the full magnitude of the problem. It’s far worse than you likely realize.
If you’ve been able to avoid just one of the dozens of tax cons lurking across the country, consider yourself fortunate. And before you dismiss tax scams as so much superstitious hype, you might want to review some common scenarios that have already cost taxpayers millions of dollars. Arming yourself with a little knowledge can make a big difference. Your money might just depend on it.
If your phone rings and you see “IRS” on your caller ID, a sense of dread is perfectly natural. The only problem is that the IRS won’t contact you by phone. But that won’t stop scammers, posing as the federal collection agency, from calling and demanding money. You’ll be advised that you have a tax debt and will be given specific instructions with how to pay – or else.
Fraudsters have been known to threaten deportation or arrest for failing to comply with their demands. And while it might seem unbelievable that such a con would work, the fact is these scammers are extremely convincing. They may have your personal information, such as your Social Security number or address, to perpetuate the illusion. No matter what you hear on the other end of your phone, don’t panic. Even if you do have a tax debt, the IRS will contact you through the mail.
In the Mouth of Madness
It’s terrifying to think that you could wake up one day and find you’ve been replaced – by a clone. While scammers can’t quite pull this off yet, they can pretend to be you and file an income tax return. This nefarious form of identity theft is designed to exploit both you and the Treasury Department during tax filing season. The scammer’s goal is to claim a fraudulent refund before you get a chance to prepare your return. Since the IRS typically issues refunds without first scrutinizing what’s been filed, this scam is frighteningly successful.
Not only will you be unable to get your refund until the IRS sorts the problem out, which can take six months or more, your future tax returns will likely fall under greater scrutiny. In order to prevent such a scenario, you will want to get your tax return in as quickly as possible. Scammers rely on individuals’ tendency to wait until late into tax season to file; don’t make this mistake.
It Came From the Mailbox
Some truly deceptive scammers will attempt to scare you with a fake IRS notice. Much like a scam call, fraudsters will attempt to exploit the fear taxpayers tend to have towards IRS correspondence. A phony notice may appear legitimate, with IRS logos, codes and even the verbiage being carefully replicated.
Unlike fake IRS calls, though, IRS notices cannot be so easily dismissed. You’ll first need to determine whether it’s authentic. A tell-tale sign of a scam is an odd demand for payment, such as a prepaid debit card. In order to be 100% certain, you can call the IRS at 1-800-829-1040 and verify what, if anything, is due.
In the event that your tax balance turns out to be real, there’s no need to scream. You can contact a licensed tax professional to help you explore your resolution options. In most cases, tax debts can be handled quickly and affordably. The only horror beyond tax scams comes when you ignore a legitimate tax liability.