As the 2023 tax season kicks off, the Better Business Bureau is cautioning the public to be wary of tax schemes that could cost time, money and heartache.
Whether you file yourself or use a preparer, there is still a risk you could run across tax scammers.
“No matter how you get your taxes done, you could encounter a scam attempt,” says Steve J. Bernas, Better Business Bureau president and CEO. “As the 2023 tax season opens, tax scammers come out of the woodwork. These cons come up with creative methods to entice busy consumers to fall for their tricks. They utilize imposter phone calls, texts, emails, and even phony letters to capitalize on the fears and emotions when filing taxes.”
The Better Business Bureau has identified four common types of tax schemes, according to a press release.
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Tax Identity Theft: This occurs when a scammer uses your Social Security number to file a tax return in your name and collect your refund. A scammer could steal your information through a fraudulent tax preparation service, data breach, hack, or a phishing scam.
Victims of tax identity theft typically don’t realize they’ve been targeted until they actually file their taxes, or until they receive correspondence from the IRS.
Email Phishing Scams: This type of scheme involves emails that appear to be from the IRS and include a link to a bogus website intended to mirror the agency's official website.
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These fraudulent emails direct you to update your IRS e-file immediately, or there is a problem with your taxes and sometimes mention USA.gov or a variation of the real IRS site. Scammers want you to call the fake number in the email or click on a link so they can download malware on your device, or to access your personal financial information.
IRS Impersonation Scams: These scams often start with a phone call and take two basic forms. In the first, the IRS “agent” says you owe back taxes and pressures you into paying by prepaid debit card or wire transfer. The scammer may threaten you with arrest and fines if you don’t comply.
In the other version, a scammer may claim they are issuing tax refunds and ask you for personal information so they can send yours. The scammer might even give a fake badge number and name. Your Caller ID may look like the call is coming from Washington, D.C.
Con artists sometimes follow up scam calls with an email, which uses the IRS logo, colors, and official-sounding language. Scammers usually try to push you into action before you have time to think and often insist that payment be made immediately by wire transfer, prepaid debit card, or other nontraditional payment methods, which are mainly untraceable and nonreversible.
The IRS' website warns taxpayers that their first communication about an overdue bill is always through the mail, and the agency will never demand immediate payment. The agency will also never demand a specific type of payment, such as via prepaid debit card.
“Ghost” or shady tax preparers: These scammers set up shop around tax time, usually in a vacant storefront. They will often promise tax filers fast or large refunds. These “ghost” tax preparers are uncertified individuals who bypass checks and balances in the tax preparer certification system.
Ghost tax preparers actually do prepare the tax return, but when it's submitted to the IRS, these scammers ask the taxpayer to sign their own return, making it look like it was self-filed. This doesn't seem like a big deal until something goes wrong and the preparer is nowhere to be found.
In order to combat these schemes, they've come up with tax time tips to follow.
-File a tax return as soon as possible, before a hacker or other bad actor can steal that information or file a false return.
-Always check the BBB website to determine whether a tax preparation company is legitimate.
-Ask tax preparers what steps they are taking to protect your data.
-Always be sure to visit the IRS' actual website. Avoid clicking on emailed links whenever possible.
-When in doubt, contact the IRS via official phone numbers or email addresses, which can be found on the agency's website.
-Be wary of tax preparers that offer fast or large refunds. What you owe is based solely on your tax information and current tax laws, and exorbitant promises are often a warning sign.
-Only allow funds to be deposited into your own accounts. Some ghost tax preparers offer to have your funds deposited into their own accounts for future distribution.
-Review any tax return undertaken by a tax preparer to ensure that it was signed properly.
-Contact the IRS immediately if you get a written notice about a duplicate return, a notice stating you received wages from a company you did not work for, or any notice that "additional taxes are owed."
-Do NOT give out your Social Security Number unless you are 100% certain that the company or individual you are speaking to is affiliated with the IRS or a licensed tax preparation company.
To learn more about how you can avoid tax schemes, check out the Better Business Bureau website.
