While it is commonly said that death and taxes are the only certainties in life, this notion overlooks the pervasive issue of tax scams. As Americans prepare to file their tax returns annually, scammers simultaneously engage in fraudulent activities, employing sophisticated schemes to exploit taxpayers.
Despite the IRS’s reputation, it is important to recognize that fraudsters impersonating the IRS pose a significantly greater threat. While individuals diligently navigate the complexities of tax forms such as 1040s and W-2s, scammers employ deceptive tactics to manipulate taxpayers.
To protect themselves from potential tax scams, it is crucial for individuals to remain vigilant and informed. While the process of determining whether a pet can be considered a dependent may be challenging, it is essential to prioritize avoiding tax scams that can lead to audit delays or even refund denial.
1. The Fake IRS Agent (Now with Deepfake Add-ons!)
The advent of deepfakes and voice cloning has revolutionized scam tactics, enabling scammers to impersonate legitimate entities, such as IRS agents. Imagine receiving a phone call from an individual who possesses your name, social security number, and speaks with the demeanor of a tax office representative. They assert that you owe money, threaten incarceration, and demand immediate payment. Overwhelmed with fear, you comply.
However, it is crucial to recognize that this entire scenario is a fabrication. The Internal Revenue Service (IRS) refrains from initiating contact via phone calls or emails demanding immediate payment. Instead, they employ official notices through traditional mail delivery, as paperwork holds a significant place in their operations. Therefore, if you encounter an individual making threatening calls and requesting payment via Venmo, cryptocurrency, or gift cards, it is advisable to disconnect immediately or report them to the appropriate authorities.
2. “You’ve Got a Secret Refund!” (You Actually Don’t)
The allure of unclaimed money is undeniable, but scammers are acutely aware of its potential. They employ various tactics, including email, text messages, and even deceptive websites, to impersonate financial institutions and claim refunds for past years. The unsuspecting recipient is then instructed to “verify” their details, which essentially involves providing sensitive information such as social security numbers and bank account details, thereby facilitating identity theft.
Source: Michigan.gov
Here is the truth: If you are owed a refund, the Internal Revenue Service (IRS) does not require your assistance in locating it. You can verify the status of any refund on the official IRS website (not the one with six hyphens in the URL). If an individual approaches you offering free money that you did not request, it is highly probable that they are attempting to exploit you.
The Ghost Tax Preparer:
If someone offers to prepare your taxes but refuses to sign your return or provide a Preparer Tax Identification Number (PTIN), it is imperative that you cease all communication with them immediately. These “ghost” tax preparers operate in the shadows, often promising substantial refunds to entice clients. However, they may manipulate your tax information, claim false credits, or vanish after filing a fraudulent return in your name.
The IRS mandates that any individual paid to prepare tax returns must possess a valid PTIN and sign the return they file. If an individual requests payment in cash without providing a written receipt, fails to answer your inquiries, or guarantees you a substantial refund prior to reviewing your documentation, it is advisable to consider them as potentially fraudulent entities.
Professional Tip: Utilize the Internal Revenue Service’s Directory of Federal Tax Return Preparers to identify a reputable individual for your tax preparation needs. It is crucial to avoid engaging with individuals who may gain popularity through unethical or inappropriate means, as your tax information should not be exploited for viral gain.
4. COVID-Era Credit Confusion
Recall the pandemic-era tax credits that emerged as a glimmer of hope during the tumultuous lockdown period. However, unfortunately, some unscrupulous individuals are attempting to revive these credits, akin to expired coupons.
One of the most prevalent schemes involves convincing self-employed individuals that they can still claim the sick and family leave credits established during the COVID-19 pandemic. These credits were only valid for tax years 2020 and 2021, and their validity has since expired. Any individual attempting to assert otherwise is either outdated or engaging in deception.
If an individual attempts to persuade you that these credits are still available for claim and offers to file your taxes on your behalf in exchange for a share of the refund, it is a clear indication of a scam. Consequently, when the Internal Revenue Service (IRS) initiates an investigation due to the claim of a non-existent credit, the perpetrator will likely have vanished.
5. Fuel Tax Credit Scams (Unless You’re Driving a Tractor, Skip It)
This particular tax credit is remarkably specific, which is precisely why it is effective. The Fuel Tax Credit is specifically designed for off-highway business purposes, such as those of farmers, heavy equipment operators, and construction crews. However, unscrupulous individuals exploit this credit by encouraging ordinary taxpayers to file for it, falsely asserting that it is a concealed opportunity for a substantial refund.
It is crucial to understand that if your daily commute involves a minivan or a Prius, you are not eligible for this credit. Engaging in fraudulent filing for this credit could result in serious legal consequences, not the kind associated with financial gain.
If an individual approaches you offering assistance in “maximizing your refund” by incorporating unfamiliar credits, it is advisable to exercise caution. While the Internal Revenue Service (IRS) may initially overlook such instances, when they become apparent, you will be held accountable, not the individual perpetrating the scam.
In essence, if a situation feels suspicious, it likely is. Scammers exhibit creativity, persistence, and increasingly sophisticated methods, but so does your ability to identify their tactics. It is important to remember that the IRS will never initiate payment requests via phone calls, offer unexpected refunds via text messages, or allow individuals to prepare your taxes in complete anonymity. If an individual makes substantial promises or employs fear to pressure you into action, these should serve as clear indicators of potential fraud.
Therefore, during this tax season, it is imperative to exercise prudence and vigilance. Stay informed and remain cautious, and if you encounter an individual claiming a $10,000 refund for “work-from-home yoga sessions,” it is advisable to simply dismiss the offer and terminate the communication.
Conversely, if you do indeed receive a legitimate refund, consider treating yourself to something enjoyable as a token of appreciation for your hard work and diligence.
