Five Ways Taxpayers can Practice Self Defense
Tax scams can occur at any time throughout the year, but are most active from January to April. Dodge a potential surprise attack by understanding how tax fraud schemes work and how you can help defend yourself against them.
It’s tax time! Law-abiding U.S. citizens are sharpening their pencils, gathering receipts and scrambling to find the correct forms to fulfill their duties as taxpayers.
At the same time, identity thieves and scammers are sharpening their devious skills, inventing new schemes to defraud the government and you.
“Many tax fraud scams use fear and intimidation with law-abiding citizens, suggesting that they are in trouble with the Internal Revenue Service (IRS),” said Trevor Buxton, who fights fraud every day as a certified fraud examiner and fraud awareness manager at PNC. “The one thing that every taxpayer needs to remember is that if you owe taxes, the IRS will first contact you in writing through the United States Postal Service (USPS) – not by telephone and not by email.”
Learn to defend yourself against some common tax fraud scams by blocking the attack with knowledge, delivering a response when faced by the threat (see tips below), and speeding up your tax filing.
Know Your Enemy
Buxton says you should put up your defenses if you recognize characteristics of the most common scams:
- Identity Theft – Topping the list is the unauthorized use of a Social Security number to file a tax return and claim a phony refund. The Internet can store your personal information, including your birthdate, address, telephone number, email address and driver’s license number, among others. What’s not available on the web may be bought on the black market, such as bank account information and Social Security numbers. It also could be picked out of your garbage and recycling bins straight from the curb.
- Phone Scams - Also called vishing – scammers pretend to be IRS agents and call taxpayers demanding payment for taxes they claim are owed. They often threaten fines, arrest, or garnishing of wages if you fail to cooperate. They may use official-sounding titles and sprinkle in some of your personal information, which is easily harvested from the Internet.
- Email (Phishing) and Text Messaging (SMiShing) – Like the phone calls, scammers pretend to be IRS agents via email or text messages. Caution! Emails also may contain malware to infect your computer by capturing keystrokes and accessing personal files on the device.
- Fake Charities – Phony charities exist, often cropping up following a major natural disaster. Taxpayers should visit the Exempt Organizations Select Check on the IRS website or GuideStar.org to ensure a charity is legitimate and qualifies for deductible contributions. The taxpayer is legally responsible for the accuracy of their returns.
- Tax Preparer fraud – Dishonest tax preparers can take advantage of you through refund fraud and identity theft. Victims often are lured by the promise of large, unrealistic refunds.
But there also is a new threat that targets tax preparers and their clients: cybercriminals are posing as potential clients with the goal of gaining access to the tax preparer’s existing client database. The scammer poses as a client and sends an email containing malware to infect the preparer’s computer and can access all of the files and information on the preparer’s device.
To stay up-to-date with the latest details on these (and other) tax scams, you can visit irs.gov.
By improving its early detection system, the IRS identified and confirmed roughly 597,000 fraudulent returns in 2017, stopping an estimated $6 billion in fraudulent tax refunds.
Take precautions to defend yourself and your family from these tax fraud schemes with the following tips:
- File early! The IRS will reject any duplicate returns filed under a Social Security number. Submit your legitimate tax return and secure a refund before an identity thief files a fraudulent one with your Social Security number.
- Do not use public Wi-Fi when filing your tax returns. As a general rule, avoid using public networks when conducting any business that involves your finances and personal information, such as online banking. If you use a public network, identity thieves may be able to collect this information and use it to file fraudulent tax returns.
- If you have not previously been notified in writing by the IRS of an issue, hang up phone calls and delete emails if they claim to be from an IRS agent. The IRS will first contact you in writing through mail regarding any tax information. To avoid potential issues, do not take phone calls from unknown phone numbers. Do not open email attachments or click on email links claiming to be from the IRS.
- Ask questions before turning over bank account or credit card information. The IRS does not ask for PINs, passwords or confidential access information for credit cards or bank accounts over the phone or email.
- Ask for recommendations and research a tax preparer thoroughly before you hand over financial documents and personal information. Also ask what steps the preparer takes to protect and secure your files from unauthorized access.
- Report IRS imposter scams to the FTC at ftc.gov/complaint.
“Time is money, even for fraudsters. Don’t answer calls from unknown phone numbers. If you do not answer, the fraudsters will stop wasting time with you and move on to the next target,” said Buxton. “Valid callers will opt to leave you a message.”
For more information on identity theft, visit PNC’s security and privacy site »
Trevor Buxton says to file early. Despite the IRS strengthening its security, identity thieves may attempt to file a bogus tax return in your name.
The IRS will never:
- Call to demand immediate payment without first mailing you a bill
- Demand that you pay taxes without allowing you to question or appeal the amount
- Require you to use a specific method of payment, such as a prepaid debit card
- Ask for debit or credit card numbers over the phone
- Threaten to arrest you for not paying
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