By Capt. Leigh Leduc, Tax Center OICMarch 2, 2018
Scams can be a problem any time they occur, but they tend to be more prevalent at this time of year. The following are some tips on how to identify common elements of different types of tax scams to avoid them and what to do if you think you have been a victim of a tax scam.
Identity theft is a common tactic used by tax scammers. The scammer can use your personal information, such as your Social Security Number and name, to file a return and pocket any refunded money.
Always safeguard personal information. Unless you are already working with the IRS on an issue, the IRS will typically send a letter in the mail to notify you of a tax problem. Any initial communication over the phone, email, or social media should be treated as suspicious. Collect as much information as possible, including the employee's name, badge number, call back number and caller ID. Then call the IRS at (800) 366-4484 to verify any of these contacts.
If you have already been the victim of identity theft, the scammer may know personal information about you, such as the last four of your Social Security number, your email address, home address or other information. If you think you may owe taxes, call the IRS yourself at (800) 829-1040 or the Fort Knox Legal Assistance Office at (502) 624-2771 to find out what to do. If you have been the victim of identity theft, you may also call the Federal Trade Commission at (877) 438-4338 and the IRS Identity Protection Specialized Unit at (800) 908-4490. If you or your spouse have been the victim of identity theft and received a letter from the IRS containing a PIN to safeguard your tax returns, be prepared to provide that number when filing your taxes or the return will be rejected.
Tax debt scam
Another common tax scam is where a scammer says you owe a large amount of money, are due a large amount of money, or just attempts to get personal information about you. Often the scam is associated with an element of urgency, demanding your response immediately.
Additionally, it is common for scammers to include threats, such as arrest or driver's license revocation, in an attempt to force you to provide them your personal information. Do not give bank account or credit card information to someone who has contacted you. Always call the IRS and verify the contact.
Money transfer scams
Additionally, many scams use money transfer products such as prepaid credit cards to receive payment. Products such as Green Dot or Vanilla Visa allow instant transfer of money in a relatively anonymous fashion, protecting the scammer from being traced, and making it almost impossible for you to get your money back.
Another concern this tax season is fees your preparer may charge. Some preparers offer loans so you do not have to wait 2-3 weeks to get a refund. This is not necessarily a "scam," however, this will reduce the amount of your refund.
Refund loans, fees and advances, whether instant or just earlier refunds, reduce the amount you will ultimately get, even if the preparer claims to offer you zero-percent interest. The money has to come from somewhere.
Inflated refund claims
Another questionable practice is inflated refund claims. Be wary of huge refunds if you are not withholding a large amount, especially if the preparer promises the large refund before even looking at your documents. The amount you receive or owe varies from person to person dramatically depending on their personal circumstances and actions taken, or not taken, during the year.
Remember, if something sounds too good to be true, it probably is. If a phone call, an email, web page, or social media contact purporting to be from the IRS demands money immediately, at the very least contact the IRS to verify authenticity before acting.
For more information, call the Tax Center at (502) 624-0044. The center is located in Bldg. 1310, 50 3rd Ave.