2021 Tax Season Scams to Watch Out For
Another tax season is upon us, and it means something different for everyone. For businesses, it means organizing financial records, meeting accountants, and assessing the cost of business. For individuals, tax season involves planning ways to repay debts or how to spend refund checks.
Tax season has an entirely different meaning for scammers and con artists: opportunity. Like many others, these individuals and organizations are looking to take advantage of people and gain access to their money. Tax scams are so prevalent that the IRS has a dedicated page for tax scams and consumer alerts.
First and foremost, it’s important to remember that the IRS does not initiate contact with tax payers in an effort to request financial or personal information via email, text, or social media. The IRS will never call to demand immediate payment using gift cards, prepaid cards, or wire transfers. The IRS will never threaten to involve law enforcement if you don’t pay taxes. Finally, they will never violate your rights as a taxpayer.
Even so, there are many scare tactics that a scammer might use to get victims to comply with their demands. It is important to be familiar with the most prevalent scams so that you can be better prepared to avoid them.
EFIN Identity Theft Scams
This year, the IRS warned tax professionals about a phishing scam that is being done in an effort to gain access to the victim’s Electronic Filing Identification Number (EFIN). Tax providers need EFINs to be able to be considered authorized IRS e-file providers. This means that they can file taxes electronically on an individual’s behalf.
Criminals are sending out fraudulent emails in an effort to gain access to client data and tax preparer identification in an effort to be able to file fraudulent tax returns for refunds. Many of the criminals have used creative ways to try and gain access to this information. Some scammers are even using these emails to infect tax preparer’s computers with malware.
Currently, tax professionals are being advised to avoid following any steps or even responding to emails requesting that they verify their EFINs. Instead, they should save the email and send it to the IRS and contact the Treasury Inspector General for Tax Administration to report the fraud.
The goal of this and other tax-related phishing scams is to gain access to private information, like your identification, account numbers, or contact information. Never share information if you aren’t sure of who the person is.
Other Email and Phone Phishing Scams
As with the EFIN scam, criminals send out fake emails pretending to be the IRS or on the Taxpayer Advocacy Panel in an effort to gain access to victims’ private information or in an effort to demand money. Some scammers are even following a script to make themselves seem more credible. It’s important to remember that the IRS cannot send you to jail nor do they have the power to have licenses or Social Security Numbers revoked because you did not pay on time.
Fake Charities and Scams Related to National Disaster
These scams happen when individuals or groups of scammers target generous taxpayers by asking for a generous donation on behalf of a good cause. Tax payers who may want to receive a credit on taxes for charitable donations may give money—only to find out that they are victims of fraud later down the line. The IRS has a specific disaster relief page for individuals needing help or wishing to donate for a good cause. Remember that the IRS will never ask a charity or individual to contact you on their behalf. Always look into the charities that you plan on donating money to.
How to Protect Yourself Against Tax Scams
While it’s impossible to be protected 100% against the possibility of being scammed, there are several tips that can help you to avoid scams and guard against tax fraud in 2021.
- File as early as possible. The earlier you file, the less opportunity a scammer has to submit a fake return on your behalf.
- Research individuals and organizations who solicit money on your behalf for tax purposes. This includes accountants and consultants. Doing research can save you from losing hundreds or thousands of dollars.
- Hire a licensed, knowledgeable private investigator. A private investigator can help you look into tax preparers or organizations that you might have questions about. This may include services like research, or background checks, to gain insight into their business practices.
Based in California, Linked Investigations has helped many people avoid tax fraud or recover from being victims of scams. If you are an individual or a business needing assistance with potential scams this tax season, reach out to Linked Investigations to speak with a licensed private investigator about your situation. Owner Mike Garroutte has been a private investigator since 1982 and is licensed in the state of California.