Although the IRS has extended the tax deadline for Texas residents until June 15 due to the disruption caused by February’s winter storms, many Texans are investigating options to file their taxes, either personally or by using a qualified tax preparer. Every year, tax-related scams significantly increase in frequency during tax season which normally runs from January-April 15. With the national extension to May 17 coupled with the Texas and Louisiana extensions to June 15, tax-related scams have a greater time window to enact their detrimental toll on American taxpayers.
The IRS has issued several alerts on popular versions of tax scams, including educational scams, unemployment benefit scams, “ghost” tax preparer scams and Social Security suspension scams. To combat the negative impacts of falling victim to these scams, it is important to understand how targets are exposed to scammers, indications of a possible scam and resources available to reassume control of your financial well-being.
On March 30, the IRS issued a warning of an ongoing IRS-impersonation scam that targets educational institutions, including students and staff who have “.edu” email addresses. The email displays the IRS logo and includes subject lines regarding tax refund payments. Recipients of the email are directed toward a phishing website where they are asked to provide personal information, such as their Social Security number (SSN), name and address.
The IRS does not initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. To verify the authenticity of communication from the IRS, search for the letter, notice or form number quoted in the email on IRS.gov or contact a local tax professional. Consumers can search for accredited tax preparation professionals at BBB.org.
Recipients of fraudulent emails from IRS impersonators should not reply or open any attachments and are asked to forward the email to firstname.lastname@example.org.
Unemployment Benefits Scams
Due to the disruption caused by the coronavirus pandemic, millions of Americans found themselves working reduced hours or losing their jobs. Many of these individuals applied for and received unemployment compensation from their state, allowing them to focus on the health and safety of their families during the pandemic. However, the availability of unemployment funds quickly became a favored target of scammers.
Using stolen personal information of individuals who have not filed claims, impostors are able to collect unemployment benefits under assumed identities. Funds received through unemployment benefits are taxable revenues and many Americans are unaware that they have been a victim of an unemployment benefit scam until they file their taxes.
Often, when an individual’s identity has been compromised and an unemployment claim is filed, the victim’s employer is notified. One victim of this scam reported to BBB Scam Tracker, “My employer contacted me to see if I had an unemployment claim against my name. As I am still working for that company, obviously it was false. Three weeks later, I received a call from a fake Social Security office informing me that my SSN had been used to open over 50 bank accounts and $10 million in money laundering and drug trafficking.”
Individuals who believe they may have been a victim of an unemployment benefit scam should contact their issuing state agency and report the occurrence to the Department of Justice. For a full list of state agencies and to file a report, visit DOL.gov/fraud.
“Ghost” Tax Preparer Scams
A ghost preparer is an individual who advertises themselves as a professional tax preparer, often stressing the return an individual can expect when they use their services. However, the preparer either refuses or conveniently “forgets” to sign the return they created on behalf of a client.
By law, anyone who is paid to prepare, or assists in preparing, a federal tax return must have a valid Preparer Tax Identification Number (PTIN). Tax preparers are required to sign and include their PTIN on any returns they create on behalf of a paying customer. Businesses or individuals refusing to sign a return is a red flag that they may be fraudulent, leaving the consumer to deal with the IRS in the aftermath of an illegitimate or incorrect filing. Filing a valid, accurate tax return is ultimately the responsibility of the taxpayer, emphasizing the importance of choosing a credible tax preparation professional.
It is important to carefully analyze a chosen tax preparation business due to the sensitive personal information provided by consumers, such as SSN, bank account information, home address and financial assets. BBB recommends consumers spend the time to research tax preparation professionals to determine their credibility and legitimacy. The IRS provides a directory service which will list preparers in a searchable area who currently hold professional credentials recognized by the IRS. Additionally, use available resources, such as BBB.org, to search for accredited tax preparation businesses. Individuals who have been impacted by tax preparer misconduct can file a report with the IRS at IRS.gov/tax-professionals and are encouraged to report the business to BBB Scam Tracker.
Social Security Suspension Scams
Individuals across America are receiving phone calls from impostors claiming to be representatives of the IRS and threatening to cancel the person’s SSN due to an unpaid tax bill. Those who receive such a phone call should immediately hang up and report the number to the IRS at email@example.com.
The IRS and its authorized private collection agencies will never:
• Call to demand immediate payment using a specific method, such as a prepaid debit card.
• Ask a taxpayer to make a payment to any other entity other than the U.S. Treasury. • Threaten to immediately bring in law enforcement personnel to arrest the taxpayer.
• Demand taxes be paid without giving the taxpayer an opportunity to appeal the amount owed.
One Texas resident reported to BBB Scam Tracker that they received a phone call from an IRS impersonator who “claimed that my social security number and name was being used to open fraudulent bank accounts. The scammer used scare tactics, like jail time, to threaten me. I provided $8,000 in prepaid gift cards to the caller and never heard back.”
Individuals who believe that they have been a victim of an IRS impersonation scam should contact the IRS and file a report with the Tax Inspector General for Tax Administration at Treasury.gov/TIGTA.
For more information on how to avoid tax-related scams, visit BBB.org/TaxScams.
Individuals who have been a victim of a tax-related or other scam should report the instance to BBB Scam Tracker. Information provided could prevent another person from falling victim.
ABOUT BBB: For more than 100 years, the Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2020, people turned to BBB more than 220 million times for BBB Business Profiles on 6.2 million businesses and Charity Reports on 11,000 charities, all available for free at BBB.org. There are local, independent BBBs across the United States, Canada and Mexico.