Tax Scams and How to Avoid Them

Tax season, important tax deadlines, and the time immediately following provides an optimal period for tax scammers to prey on unexpected people. The IRS states: “Thousands of people have lost millions of dollars and their personal information to tax scams.” Scammers use various methods to contact victims including regular mail, phone calls, social media, and texting. Keep reading to learn more about the most common tax scams and how to avoid them.

How to Tell When it is the IRS Contacting You

One of the easiest ways to tell when the IRS is contacting you is to learn the ways the IRS will not use to reach out to you. The IRS never uses email, text messages, or social media to request personal or financial information. If someone is contacting you using one of these ways claiming to be the IRS, you know it is a scam.

The IRS uses regular mail delivered through the United States Post Office to contact most taxpayers. Although, there are situations when the IRS will call or visit. Typically, the IRS only starts calling or visiting after one or more letter and/or notices have been sent in the mail. Even then, the IRS will only call or visit in special circumstances, usually involving: an overdue tax bill, a delinquent tax return or a delinquent employment tax payment, or to tour a business as part of an audit or during criminal investigations. The IRS is not going to be visiting or calling the majority of your average taxpayers.

Another easy way to tell it is not the IRS is too learn what the IRS will not do. Most scammers pressure victims to pay immediately, so they can get paid and move on to the next victim. The IRS will never call to demand immediate payment using a specific form of payment like a prepaid debit card, gift card, or wire transfer. Scammers like these forms of payment because they are harder to trace and give them instant access to the funds. The IRS has a list of acceptable forms of payment listed on the IRS website. IRS employees will never request you use a specific one. The IRS almost always sends a bill, notice, or letter to the taxpayer first before initiating further contact. Also, the IRS will not demand payment without giving the taxpayer the opportunity to appeal or question the amount owed. Scammers want to drive the victim to give immediate payment, making the victim feel like they do not have other options. Finally, the IRS will never threaten to contact local police or immigration or to revoke your business license, driver’s license, or immigration status for failing to pay your taxes. These are some common tactics scammers use to get victims to pay immediately.

There are two main ways to tell when it is the IRS contacting you. First, the IRS always instructs taxpayers to make payments to the United States Treasury. The IRS provides specific instructions on how payments can be made, which can be confirmed here on the IRS’ website. Second, the IRS, typically, does not visit taxpayers unless it is to conduct an audit or criminal investigation. If the IRS does pay you a visit, they carry two forms of official credentials to confirm they work for the IRS: a pocket commission and HSPD-12 card. You have a right to see these two forms of identification and to confirm they work for the IRS.

Tax Scams and Consumer Alerts

The IRS keeps a current list of ongoing tax scams and consumer alerts that have been reported. That list along with how to report tax-related scams can be found here on the IRS’ website.  

The Bottom Line

Protect yourself. If you think someone from the IRS is calling or visiting you, take an extra few moments, step back, and confirm it is the IRS. In most cases, the IRS always sends a letter and/or notice first, before IRS agents will call or visit you. The IRS will never demand immediate payment or use threatening tactics. Also, they will never require payments to be sent to anyone other than the United States Treasury. If anyone contacts you seeking immediate payment without giving you the right to review or appeal, requests you to make payment to anyone other than the United States Treasury, or contacts you through social media, email, or text messages, it is not the IRS. Finally, the IRS will never threaten to contact local police or immigration authorities or revoke your licenses. Demand for immediate payment, especially payments that are hard to track and threaten tactics are signs scammers are trying to make you their next victim.  

One of the easiest way to spot tax scammers is to avoid issues with the IRS entirely by having your tax returns completed by the tax professionals at Gudorf Tax Group. This way if someone tries to scam you, you will know you are not being contacted by the IRS. And, if the IRS does send you a notice or letter, you can contact Gudorf Tax Group for help understanding the information the IRS requires. Schedule your appointment with Gudorf Tax Group to prepare your tax returns or to apply for an extension.  

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