Have you ever gotten a phone call or email from someone making claims about your taxes but something just felt… off? If so, you could have been the target of a tax scam. Sadly, where there are taxes, there will be attempted scams so it’s important to stay vigilant.
In 2023, the IRS received 294,138 complaints of identity theft, the second highest in history. From email to social media, advances in technology provide new ways for scammers to target people. It’s a good idea to stay aware of the most common threats so you know how to protect yourself. We’ve rounded up three of the most popular tax scams to watch out for this year.
Top Three Tax Scams to Avoid
A tax scam is categorized as fraudulent activity or scheme designed to illegally obtain money or sensitive personal information from a taxpayer. They’re usually perpetrated by someone posing as a tax authority, financial institution or even the IRS. There are a multitude of ways that someone might try to steal money or information but here are three of the most popular.
- Phishing Scams: Phishing scams involve fake emails or websites that mimic legitimate IRS communication to steal personal information. Scammers may send emails claiming to be from the IRS, requesting your sensitive information like Social Security numbers, bank account details, or credit card information.
- Phone Scams: Phone scams, also known as IRS impersonation scams, involve callers pretending to be IRS agents. They may threaten arrest, deportation, or license revocation if you don’t make an immediate payment. These scammers often demand payment via prepaid debit cards, gift cards, or wire transfers because they are hard to trace.
- Identity Theft: Tax-related identity theft occurs when someone uses a stolen Social Security number to file a tax return and claim a fraudulent refund. Victims typically discover the theft when they try to file their own return and it gets rejected because a return has already been filed under their SSN.
How to Protect Yourself from Tax Scams
If you are contacted by someone you don’t know claiming to need information regarding your taxes, here are some important things to keep in mind:
- The IRS will never initiate contact via email or social media to request personal or financial information.
- The IRS will not call to demand immediate payment using a specific payment method or threaten with law enforcement action.
It’s important to verify the identity of anyone claiming to be from the IRS of other tax-related entity before providing any information or money. Another way you can project yourself is to use strong passwords and keep sensitive documents in safe places. Be sure to keep a close eye on credit reports and tax accounts for suspicious activity as well. If you notice something strange, contact your bank or trusted tax professional right away.
Work with Tax Professionals You can Trust
Working with a local, reputable accounting firm can give you an extra level of protection against scams by providing a reliable advisor you can go to with any questions. Neely’s Accounting Services has been providing tax services to Roanoke, VA since 2007 and is a trusted resource for tax payers across the valley. Let Neely’s help you with all your tax needs. Contact us today.