No one likes doing their taxes, but filing early may actually help you avoid tax fraud this year.
Tax scams are among the types of fraud most frequently reported to BBB, and scammers often impersonate the IRS. Their goal is either to get your personal information for tax identity theft or to trick you into paying them directly.
How tax scammers operate:
· By phone: Someone pretending to be with the IRS calls you and requests personal information or payment, claiming you owe back taxes or that they're working on your refund. They may pressure you to act immediately and threaten you with arrest or fines if you don’t comply. These scammers will go to great lengths to appear real, including giving a fake badge number, leaving official-sounding robocall messages or setting up a fake caller ID.
· By phishing: Scammers send messages by email, text or social media claiming to be from the IRS. These messages link you to a fake IRS website to “update your IRS e-file immediately.”
Once they have your Social Security Number (SSN) or other personal information, scammers can commit tax identity theft by filing taxes in your name and collecting your refund.
Remember that the IRS will usually communicate with you by postal mail – never by email, social media or text message. Trust your gut if you get a message that doesn’t seem right.
BBB’s tips to avoid tax identity theft and scams:
● File early. Filing as soon as you can reduces the chance that someone can steal your identity by filing your taxes before you do. Make sure you have all relevant documents before you file.
● Consider an Identity Protection PIN (IP PIN). An IP PIN is a six-digit number from the IRS that confirms your identity. It can help identify you if someone commits tax fraud using your SSN. The IRS will provide your IP PIN online when you first opt in and will then mail you a new one each December.
● Know how the real IRS will contact you. The IRS will never email you, text you or contact you on social media to request personal or financial information. They will most likely communicate with you through postal mail, but there are some circumstances where they might call or visit after first reaching out by mail.
● Know how scammers will ask you to pay. The IRS will never demand immediate payment, require a specific form of payment or ask for credit card numbers or bank information over the phone. Never pay anyone asking for cryptocurrency, a wire transfer or a gift card.
● Use secure tax filing websites. Make sure you are accessing the real IRS website or other tax filing website by checking that the URL is spelled correctly. Look for the lock symbol to the left of the URL – this means your connection is secure.
● Protect your information. Store your tax documents in a secure location in your home or on a password-protected computer. As a general rule, don’t give out your SSN unless absolutely necessary. Research tax preparers thoroughly before you give them your personal information (and check out BBB’s guide to choosing a tax preparer).
● Know the signs of fraud. If the IRS informs you that your return has already been filed or that you received wages from an employer you don’t know, you could be a victim of tax fraud. Visit an IRS office as soon as possible to resolve the problem.
● Report scams. If you think you’re a victim of a tax scam or identity theft:
o Report it to the IRS.
o File a complaint with the FTC.
o Report it to BBB Scam Tracker.
