Preparing and filing your taxes is one of those necessary but altogether unpleasant annual tasks. As if taxes weren’t horrible enough on their own, criminals are now using them as a way to devise new ways to trick us into scams with potentially horrific consequences.
According to IRS data, tax scams spike in January and February and intensify through April. Last year, scammers targeted numerous business owners by misrepresenting the Employee Retention Credit (ERC), charging hefty fees for assistance with applications for a credit many victims didn’t even qualify for. So many business owners were attacked that the IRS set up an ERC withdrawal program to help those who had unknowingly submitted fraudulent claims.
Popular Tax-Time Scams
This year, scammers will likely take a different approach. Tax scams are particularly tricky because no well-meaning taxpayer wants to make a mistake and get in trouble with the government. Scammers and cybercriminals prey on our fear of compliance issues by posing as IRS agents, tax software providers or even colleagues in financial departments, with urgent messages demanding payment or Social Security numbers.
In fact, these scammers are likely already in your and your company’s inboxes. Here are some of the more common tax-time scams and what you can do to prevent them.
- Phishing and Smishing Scams
Scammers love pretending to be the IRS to get your personal information. They’ll send fake e-mails or texts promising refunds or threatening legal action, hoping you’ll click on their links or share sensitive details. These scams don’t just target individuals – they often go after tax pros and businesses that could end up giving access to significant amounts of valuable data.
How to prevent it: Never click on links or reply to unexpected messages claiming to be from the IRS. Report suspicious e-mails to phishing@irs.gov, and aways verify messages directly with the IRS through official channels.
- Online Account “Help”
Scammers target taxpayers by offering to help set up an IRS online account. Their goal is to steal your personal tax and financial information, which they can then use for identity theft. These criminals may pretend to be “helpful” third parties, tricking you into handing over sensitive details like Social Security numbers or IDs, which they can use to file fake tax returns and steal refunds.
How to prevent it: Only create your online account directly through IRS.gov and do not accept any unsolicited offers for third-party help. If someone reaches out offering to assist, it’s probably a scam.
- Fuel Tax Credit Scams
The IRS is also warning taxpayers about scams pushing Fuel Tax Credit claims. These claims are only available for off-highway business or farming use, but scammers will mislead you by fabricating documents or receipts for fuel to make false claims, often charging hefty fees in the process. While these scammers profit, you are left with the risk of facing IRS scrutiny and potential penalties.
How to prevent it: If you’re considering claiming a Fuel Tax Credit, make sure you’re eligible. Incorrectly claiming it could lead to serious consequences like fines or even criminal charges. Always consult a qualified tax professional to ensure your claims are legitimate.
You Know the Saying: If It Sounds Too Good to Be True
Unfortunately, these scams are pervasive online, promising tax savings. These schemes might look tempting, but they can land you in hot water with the IRS and lead to serious legal trouble. Save yourself the grief and stick to legitimate, proven methods.
For more details on how to stay safe from all the worst tax scams currently circulating, check out the IRS Dirty Dozen list at https://www.irs.gov/newsroom/dirty-dozen.