Tax Scams: Knowledge is your best weapon

Wednesday October 14, 2015 comments

The most important tool you can use to protect yourself from scams is KNOWLEDGE. It is important to learn what scams are common and how to recognize and report them.

Telephone Scams

In this scam the caller pretends to be from the IRS with the intention of stealing either money or the identity of the victim.  The tone of the calls can vary from collecting obligations to the IRS or issuing huge refunds that the victim supposedly is not aware of.  Threats of legal action, arrest, or revocation of driver’s license form part of this scam.

The threats are usually followed by calls from partners of the scammer who pretend to be from law enforcement agencies or the Department of Motor Vehicle (DMV) among others.  Callers can even become hostile or resort to insults in an attempt to force victims to pay via wire transfer or pre-loaded debit cards.  Some characteristics that this scam is happening to you are:

  • Fake names and IRS badge numbers are used with the surnames and names sounding extremely common;
  • The last four digits of your SSN is known to them;
  • Capable of spoofing the toll-free number of the IRS to make the call appear legitimate;
  • Sending bogus emails from the IRS as support;
  • Allowing victims to hear background noises to mimic call sites.

The best protection is to hang up the phone and get in touch with the IRS at 800-829-1040 to personally verify if you have a problem.  If you are certain that you do not have any obligation with the IRS call 800-366-4484 to speak with the Treasury Inspector General for Tax Administration.  You should also notify the Federal Trade Commission at FTC.gov using the comment IRS Telephone Scam to take an active stand in stopping this fraud.

Remember, IRS does NOT call taxpayers. 

Phishing

Just like on the Internet, this tax scam makes use of fake websites and unsolicited emails that are designed to appear legitimate.  The ploy is to trick victims into releasing personal and financial information to initiate identity and financial theft.  When in doubt about an IRS email or someone contacting you implying to be associated with the IRS, immediately send an email to [email protected].  Remember that the IRS never uses email, text messaging, or social media channels to initiate contact with taxpayers; this should immediately be a warning sign for you.

Disguising as Charitable Organizations

Scammers will take advantage of every situation to commit fraud including natural disasters.  One of the most prevalent is the impersonation of charitable organizations to cheat well-meaning taxpayers.  Telephone and email are the most common forms of contact where either money or financial information is extracted.  Even victims are taken advantage of by implying that they will be assisted in the filing of casualty loss to get tax refunds.

Current Event: Watch for Possible Scams Relating to South Carolina Flood Victim Relief  

The Internal Revenue Service issued a consumer alert about possible fake charity scams emerging due to severe flooding this month in South Carolina and neighboring states.

Following major disasters, it is common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers.

Such fraudulent schemes may involve contact by telephone, social media, email or in-person solicitations.

The IRS cautions people wishing to make disaster-related charitable donations to avoid scam artists by following these tips:

  • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature ,Exempt Organizations Select Check,
  • Legitimate charities may also be found on the Federal Emergency Management Agency (FEMA) website at fema.gov.
  • Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money.
  • Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.
  • If you plan to make a contribution for which you would like to claim a deduction, see IRS Publication 526, Charitable Contributions, to read about the kinds of organizations that can receive deductible contributions.

Bogus websites may solicit funds for disaster victims. Such fraudulent sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade members of the public to send money or provide personal financial information that can be used to steal identities or financial resources.

Additionally, scammers often send email that steers the recipient to bogus websites that appear to be affiliated with legitimate charitable causes.

Scams Aimed at Business Owners

Labor Laws:

There are several companies that send out threatening e-mails indicating that you MUST purchase Labor Law Posters

These posters referred to can be obtained free of charge from the Colorado Department of Labor and Employment by going to http://www.colorado.gov/pacific/cdle/node/32366 as well as the US Department of Labor by going to http://www.dol.gov/compliance/topics/posters.htm .  

Corporate laws:

Beware of Phony State Agency Documents
Unfortunately, one of the most common scams is the use of phony state agency documents.  Designed to look like official documents, the phony documents entice recipients to fill them out and file with the Secretary of State or other state agency.  For any official looking document, please review carefully and read the small print.  If you believe your entity has been the victim of a fraudulent solicitation by Corporate Records Service, please contact the Office of the Attorney General in the respective state.

 

 Remember -- you can be ahead of the game and able to recognize when something doesn't feel right. For more information talk to Laura or visit the IRS website to learn more.

 



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