Tax fraud, identity theft, and calls from those claiming to represent the IRS cause thousands of people to lose their hard-earned money each year.
In March 2019, the IRS warned that scammers claiming to be from the IRS Taxpayer Advocate Service office in Houston or Brooklyn were making unsolicited calls to unsuspecting taxpayers. Those who answered the phone or returned the calls were asked for their Social Security numbers or other identifying information.
Meanwhile, the accompanying rise in phishing schemes eventually prompted the IRS to release its list of top IRS scams in June 2021.
That said, how can you protect yourself from falling victim to IRS scams? Below, we offer 5 suggestions that can help.
1. UNDERSTAND HOW THE IRS INITIATES CONTACT
In almost all cases, the IRS contacts taxpayers via regular mail delivered by the United States Postal Service (USPS).
While there are several exceptions to this rule, those are few and far in-between. They usually involve serious tax delinquency, a comprehensive audit, or a criminal investigation — and even under those special circumstances, the taxpayer usually receives a prior notice in the mail.
2. NEVER GIVE OUT YOUR INFORMATION VIA PHONE, EMAIL, OR SOCIAL MEDIA
A scammer claiming to represent the IRS may call you over the phone or contact you via email, text messaging, or social media. Such imposters may sound very convincing and have seemingly legitimate credentials.
They may even threaten to take legal action against you if you don’t comply with their demands. However, take note. The IRS very rarely contacts anyone over the phone and will never initiate contact with a taxpayer via email, text, or social media.
3. ASK WHO WILL BE RECEIVING THE PAYMENT
IRS employees, and the collection agencies that partner with the IRS, will never demand immediate payment to a recipient other than “U. S. Treasury.” If someone claiming to represent the IRS asks for payment to any other entity besides “U. S. Treasury,” that’s a dead giveaway that you’re dealing with an imposter.
4. FILE YOUR TAX RETURN EARLY IN THE YEAR
Tax identity theft is another type of IRS scam that’s become more prevalent in recent years. Scammers may try to impersonate you by filing a tax return in your name and redirect your refund to their own address or bank account.
If a scammer beats you to the punch, then it may take a lot of time and effort to sort things out — and you may end up losing whatever money was coming your way.
Apart from keeping your Social Security number safe from prying eyes, filing your return early in the tax year can help prevent this kind of fraud from happening to you. If you receive one of the following IRS notices in the mail, be sure to follow up with the agency directly to determine if you’ve fallen victim to tax identity theft:
- More than one tax return was filed using your Social Security number.
- You owe additional tax on your return.
- You have had a tax refund offset.
- IRS records show that you earned wages from an employer you don’t recognize.
- You’ve had collection actions taken against you for a tax year in which you didn’t file a tax return.
5. ALWAYS GO THROUGH THE PROPER CHANNELS
If you do have any questions about your status with the IRS or are worried that a collection agent will initiate legal action against you, always go through official IRS channels to address your concerns.
You can find a wealth of information on the official IRS website. For example, the website has a list of official contacts for the IRS, including phone numbers for hearing-impaired callers, non-profits, individuals, and businesses.
Even though IRS scammers are getting more sophisticated with each passing year, you can educate yourself about their tactics, and learn how the real IRS operates. If you implement the 5 suggestions above, you’ll be less likely to fall victim to IRS scams, and you’ll be able to enjoy peace of mind as you live your best life.