Beware of Tax Season Scams

Published in The Valley News February 26, 2017

As tax season gets underway, tax-related scams intensify. There are many of these scams circulating.  Be aware of the common ones so as not to fall prey - knowledge is power.  Below are common scams IRS is warning taxpayers to avoid.

W-2 Phishing:  IRS released an urgent warning about a new W-2 phishing scam aimed at employers.  Cybercriminals spoof a company executive’s email.  Using that email address, they send a request to payroll or human resources contacts requesting copies of the company’s W-2s.  Not only should you be wary of this type of scam, but you should NEVER email W-2 forms in any case because they are so sensitive.  W-2s contain all the information necessary to steal one’s identity – full name, address, social security number, income and employer.

E-mail Spoofing Wire Transfers:  In addition to using spoofed emails from known persons to request W-2s, cybercriminals have also used this method to request wire transferred funds.  Because the recipient believes the email to be from their own company executive, this ploy also works. These emails may also come to a person from a trusted friend’s email address.  Be sure to get in-person confirmation before following instructions for funds transfer from an email source.

Phone Scams:  This is the one that I hear reported most often by my own clients.  A caller claims to be an IRS agent and demands immediate cash payment for taxes.  They direct the victim to bring cash or wire transfer money to a certain place.  These callers can be aggressive and convincing.  They threaten the taxpayer with arrest or offer to accept a “reduced” settlement amount if they pay immediately.  If you receive such a call, hang up.  You can call the IRS directly at 800-829-1040 to verify that you have no outstanding tax issues.

Fake Charities:  There are many unscrupulous groups preying on generous people.  Some claim to represent a charity that has a name similar to legitimate charities.  I had a client who had donated his car to one such “charity”.  When we tried to track down the federal identification number for his tax deduction, we discovered it was a fraud.  IRS.gov has tools to look up the status of charitable organizations – check them out before donating.

Return Preparer Fraud:  Duly licensed tax preparers are by-and-large people of integrity.  However, taking advantage of the public’s trust of our profession are some criminals posing as tax preparers to perpetrate identity theft. Check the IRS preparer to directory to be sure your professional is in good standing at irs.treasury.gov/rpo.  Even some licensed preparers have committed other types of fraud, such as having client refunds deposited into the preparer’s bank account.  If you prepare your own taxes online, be sure you thoroughly check the legitimacy of sites – especially “free” sites or “tech support” links.  These are sometimes covers for phishing scams.  The exception is IRS Free File at irs.gov/freefile.

Although technology has improved our lives in many ways, vulnerability to cybercrime and identity theft are sometimes the price.  Tax time is open season for these criminals.  Arm yourself with the power of knowledge and do not fall victim.