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Watch Out for These Common Tax Scams

Taxes can be a touchy subject for individuals and business owners, and many people agree that their stress levels go up when they think about tax filing or payments. Even though taxes can be unpleasant, they are a necessary part of owning a business. If you don’t like dealing with tax paperwork, then the best thing that you can do is hire an experienced accounting and bookkeeping team to handle the details for your company.

Scammers know that people get stressed about their taxes, so it is common for scammers to use this angle in an attempt to gather your information or steal your money. A phone call or email from a scammer that mentions your recent tax filing could be a stressful experience. Unfortunately, many people make the mistake of complying with the scammer’s requests before talking to their accountant.

Why Do Scammers Focus on Taxes?

There are a variety of reasons why scammers use the topic of taxes. Not only will the topic of tax payments make people pay attention to the conversation, but many individuals will be compliant with the scammer’s requests. People don’t want to get in trouble with the IRS, so they often follow instructions when they believe that the person on the other line is calling from a reputable organization.

Tax scams have become so common that the Internal Revenue Service formed a security summit with the tax industry and state tax departments. This summit was formed in 2015, with the goal of fighting against tax crimes. Information is shared to keep the public informed about potential new scams.

Tax scams open an opportunity to get money from innocent people who think that they are making a tax payment. Another form of fraud occurs when the scammer gathers personal information and then uses those details to file fraudulent tax returns to get the refunds.

Types of Tax Scams

How do you know if you are the target of a tax scam? The best thing that you can do is stay informed about the trends in the industry. This information will help you identify the potential warning signs that someone is trying to scam you. Here are a few things that you can watch for:

  • Suspicious Emails: Be careful if you receive an email referencing your e-Service account closures. Many people file their taxes online, and then the scammers take advantage of the situation by sending messages about an account closure or a blocked e-Service account. Examples of these email headlines might include:
    • 24 Hours to Block Your Account
    • Your Account is Terminated
    • Few Hours to Close Your Account
    • Your e-Service Account is Closed
    • Account Closure!
  • Electronic Links: If you receive a tax scam email, then it might contain an electronic link that goes to a fake e-Services login page. The goal is to gather the credentials that you type into the fake website. Even if the link looks legit, it is best to go to the source (the e-Services website) instead of clicking on a link within an email. There are times when these messages look authentic with a face “IRS gov e-Services” logo or signature at the bottom. The website URL might include “IRS” or other seemingly applicable words. But, the link is hosted on a scammer website designed to gather your information. Never open an attachment or link that comes through a questionable email.
  • Software Provider: Another type of tax scam email might look like it is coming from your tax software provider. If you filed taxes without the help from an accountant, then you likely used a popular tax preparation software. Scammers sometimes mimic these software providers in phishing emails, asking users to update their online profiles. When you enter in the information, you will be providing your details to the scammer. These phishing emails can also appear to come from other reputable sources, such as the IRS, credit card companies, banks, and more.
  • Phone Scams: Criminals sometimes impersonate IRS agents by pretending to call about your tax filing. Often, these phone calls come through in a threatening way, which scares individuals into providing information over the phone. Recently, there has been a surge of these phone calls, and the IRS has issued warnings for people to be careful if they receive a phone call regarding tax issues. These threats might include deportation, police arrest, fees, or garnishment. The best thing that you can do is hang up the phone!
  • Identity Theft: It is possible that you could be the victim of tax fraud without realizing that there is a problem. This scam involves filing a fake tax return using someone else’s social security number. The IRS is working to fight against this problem, but can still happen if the wrong person gets their hands on your social security number.
  • Fraudulent Return Preparers: If you don’t want to go through the hassle of filing your tax return, then it makes sense that you should hire an accountant to help. But, you need to be cautious about the person that you choose to hire. Most tax professionals offer legitimate, honest services for businesses and individuals. But, there are a few bad eggs in every industry. These fraudulent shops are designed to commit refund fraud and steal information from taxpayers. So, it is wise to do your homework and learn more about your tax professional before handing over your personal
  • Signing a Blank Tax Return: One red flag that might indicate that you are dealing with someone who is a scammer is if they ask you to sign a blank return. There are times when the preparers make promises about inflated tax returns, so individuals will sign the black form with the hope that they will receive more money. Be cautious and make sure that you can see the numbers before signing on the bottom line.

Protecting Yourself and Your Business

What can you do to keep your business protected? Instead of waiting to be a victim of a tax scam, there are a few things that you can do to prevent the problems in the future. For example, it is a good idea to change your e-Services credentials on a regular basis. Use a strong password and change it immediately if you suspect that someone might be targeting you.

Never make the mistake of providing personal information if it is requested via email. These emails can be dangerous, and you should stop immediately if you see this type of request for information. If the IRS needs to talk to you about your recent tax filing, then they will send an official letter.

Another common mistake to avoid is opening attachments or links from a source that you don’t recognize. The attachment in the email could contain a virus or malware designed to gather information from your computer. Avoid clicking on the link, and never “reply” to the email.

A tax professional can provide the advice that you need to determine if you are receiving a legitimate message from the IRS. So, if you have a concern, then the best thing that you can do is pick up the phone to talk to your accountant. Make sure that you are calling your accountant directly, instead of using the contact information in the questionable email.

If you want to do your part to help other people avoid tax scams, then you might consider sending the suspicious emails to the IRS. They have an email address to gather this information: phishing@irs.gov. After the email has been forwarded, you should delete the message from your inbox.

Honesty in Your Tax Filing

It can be stressful to face an audit or problems with the IRS, so it is important that you are honest in the way your taxes are filed. Even if you aren’t being scammed, there are things that you could do which will potentially raise red flags for the IRS. Be careful to make sure that you are working with an experienced, trusted accountant.

Common tax fraud mistakes can be used to help you maximize your return and avoid expensive payments. But, these things could put you at risk if you aren’t following the rules established by the IRS. For example, inflating deductions or falsifying income could lead to big problems in the future. Keep yourself protected by working with an accountant who follows the rules and files the taxes according to the guidelines.

If you need a trusted accounting team to help with your tax paperwork, then Easier Accounting is here to help! We would love to assist with anything that you need. We invite you to contact our team to schedule a consultation and learn more about the services that we offer. With many years of experience in the accounting industry, we have the knowledge that you need for your small business or startup. Call us for more information to see if these services are a good match for your company: (888) 620-0770