Every year the IRS releases its “Dirty Dozen” list of the most prevalent tax scams, many of which use technology to take advantage of victims. While tax scams happen year round, the IRS warns taxpayers to be particularly cautious during tax season when incident rates increase dramatically. Identity theft, pervasive telephone scams, and phishing top this year’s list.
The IRS is integrating new methods to try to catch fraudulent claims before they get processed. They’ve developed sophisticated pre-refund filters to stop a majority of fraudulent returns, but just as the IRS increases their protections, scammers grow more sophisticated in their methods. In an effort to help victims, the IRS has issued approximately 1.5 million “Identity Protection Pins” (IP PIN) – a unique, six-digit number that is assigned annually to victims of identity theft to allow these individuals to avoid delays when filing returns. This year, the IRS will open its pilot IP PIN program to taxpayers from Florida, Georgia and the District of Columbia who elect to opt in.
Another common tax scam is phishing, which most commonly involves fake emails or websites that are used to try to steal personal information from potential victims. Phishing scams are typically sophisticated in their charade. Emails often show a sender address that appears to be from irs.gov and claim to be from an IRS representative. Phishing emails often send recipients to fake web pages with what appears to be a government web address, and pages are deceptively similar to the IRS website. However, any information that you provide in response to a fake email, or enter into a fake website is instead captured by scammers that either sell it to criminals or use it to commit identity theft.
“The IRS won’t send you an email about a bill or refund out of the blue. Don’t click on one claiming to be from the IRS that takes you by surprise,” said IRS Commissioner John Koskinen. It’s important to remember that the IRS will not initiate a contact via email or text message to request personal or financial information, nor will they contact you through social media channels. In almost all cases, contact from the IRS will first be made in writing.
Aggressive and threatening phone calls from scammers claiming to be IRS agents and demanding payment for (fictitious) penalties or tax fines have surged in recent months. Criminals will use a number of tricks to try to scare victims into providing credit card or bank information to pay these non-existent penalties, including threatening police arrest, deportation, license revocation and any number of legal and financial perils.
According to the IRS press release, “the Treasury Inspector General for Tax Administration (TIGTA) has received reports of roughly 290,000 contacts since October 2013 and has become aware of nearly 3,000 victims who have collectively paid over $14 million as a result of the scam, in which individuals make unsolicited calls to taxpayers fraudulently claiming to be IRS officials and demanding that they send them cash via prepaid debit cards.”
As with other scams, perpetrators have grown increasingly sophisticated. They can alter caller ID numbers to make it look like the IRS is calling. They use fake names and often give bogus IRS badge numbers. They often know a lot of personal information about you. If they reach your voicemail, they often leave “urgent” demands for an immediate call back. They often prey on those most vulnerable, such as the elderly, recent immigrants, and those for whom English is a second language.
“If someone calls unexpectedly claiming to be from the IRS with aggressive threats if you don’t pay immediately, it’s a scam artist calling,” said IRS Commissioner John Koskinen.
To more easily identify phone scams, the IRS compiled a list of five things that scammers often do, but that the IRS will NOT do:
- Call to demand immediate payment or call about taxes owed without first having mailed you a bill.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- Require you to use a specific payment method for taxes or penalties, such as a pre-paid debit card.
- Ask for credit or debit card numbers over the phone.
- Threaten to bring in local police or other law-enforcement agencies to have you arrested for non-payment.
To see all of this year’s “Dirty Dozen” tax scam warnings, along with the IRS recommendations for how to avoid becoming a victim, the IRS suggests that you visit their Tumblr page, where people can search “scam” to find all the scam-related posts. To view videos created by the IRS to help inform the public, head to their YouTube channel.