How to Identify Tax Scams

As a taxpayer, you may be targeted by scammers who are trying to access your personal information. Because new tax-related scams arise every year, it can be challenging to identify and avoid them. This is why taxpayers should understand how the IRS communicates. Being aware of suspicious messages can help you avoid sharing sensitive data or making payments to unauthorized parties.

How Scammers Use Phone Calls to Deceive Taxpayers

Phone calls are perhaps the most common way scammers target their victims. They may leave urgent or threatening messages, compelling you to take a specific action as soon as possible. For example, they may demand that you disclose specific information or legal action will be taken against you. However, the IRS never leaves pre-recorded phone messages that issue threats. Most communication coming from the IRS is done on official letterhead sent via the U.S. Post Office.

Unfortunately, some scammers can modify their caller IDs to look like they’re coming from an official IRS source. So, how can you tell that the call is fake? If the person is requesting immediate payment or sensitive information (such as your social security number), don’t give it out before calling the IRS first.     

How the IRS Contacts Taxpayers

Discuss Your Tax Needs with a Tax Representative at Fair, Anderson & Langerman

As previously mentioned, official letters are the main communication channel of the IRS. It is only under special circumstances (such as overdue taxes or delinquent returns) that the IRS will call or physically visit your premises.

If you do owe money to the IRS, they will first initiate contact via mail. The IRS also doesn’t receive payments via gift cards, wire transfer or prepaid debt cards. 

Many scammers also use email to threaten taxpayers into a specific course of action. In fact, email phishing scams are commonly used to target multiple people or businesses at once. If you receive such an email, forward it to phishing@irs.gov. Don’t open any links or attachments that may be included therein.  

Signs of an IRS Scam  

There are several identifying factors of a tax scam. These signs include:

  1. The Payment Channels

    The IRS has very specific channels for receiving payment. If you get a message requesting payment via prepaid cards or wire transfer, this is a clear sign of a scam. Scammers may also ask for checks to be paid to unfamiliar persons or entities. Note that the IRS requires all checks to be paid to the U.S. Treasury.  

  2. Overblown Threats

    In an attempt to scare people into giving out their personal information, scammers may also issue threats that are inconsistent with IRS actions. For example, they may threaten immediate arrest or jail time for not providing information or payment within a specific time frame. 

  3. Not Being Given Time to Ask Questions  

    The IRS doesn’t bully people into making payments without understanding what they owe. And since scammers are trying to turn profits quickly, they can’t answer any questions you may have. Most scam phone calls or emails won’t give you an opportunity to seek redress for your tax-related concerns. 

If you receive a call that you think may be a scam, hang up and report the number/caller ID to phishing@irs.gov. You should also verify your tax information by contacting the IRS (online or by calling 800-829-1040). 

If you have any tax-related concerns – Fair, Anderson and Langerman can help. We’re Certified Public Accountants and Business Advisors with 30 years of experience in the Tax Accounting field. Contact us at 702-8700-7999 to speak to a tax representative today.