Tax season is upon us and with that comes the stress, anxiety and confusion on our yearly tax issues. As I wrote a few weeks ago Ponzi Schemes have been around for almost a hundred years and take in millions of dollars from novice and seasoned investors annually. But during tax season there are also plenty of people who are running scams on you and your tax concerns as there are people running Ponzi Schemes. Here are some of the more common tax schemes that are aimed and geared at separating you from you money and could cause serious problems with the IRS.
The first may be one of the more common schemes and problems with tax season and that is a dishonest tax preparer. Beware that not all tax preparers are honest with some skimming money off your return and other simply charge inflated or outrageous prices to prepare and file your return. Also beware of preparers who offer to or guarantee to get you refunds that are not reasonable or practical. Let’s face it do not try to cheat the IRS as they at some point will find out and they will come after you not your tax preparer as a rule. Also beware of preparers as you do have to give them a lot of your personal information which they can use to steal or sell your identity. It is best to go with reputable firms or preparers that are licensed professionally such as a CPA or licensed financial advisors. And before you agree to hand over all your information make sure you ask them about all the fees associated with preparing your tax return and how and what they do with your information that you have to provide in order for them to prepare your return. You can never underestimate the need for security for your personal information. Also you need to make sure you are paying a flat fee and not a percentage of your return and always have the return sent to or deposited in your accounts never that of the preparer. Only sign a return that you understand and never sign any blank forms. Again the IRS will go after you and not the person who prepared your tax return.
Another popular scam involves someone claiming to be with the IRS and they inform you that you owe money. In many instances they will threaten you with arrest or deportation if you do not pay them. As a rule they will have your name, address, phone number and even a part of your social security number making them sound very official. In many instances they will even have a phone number that will register as an IRS call when your caller ID receives the call. In many of these instances the individual that contacts you will ask for payment in the form of a money order, credit card or prepaid debit card. According to the IRS they will never ask for a particular type of payment and do not as a rule call you to inform you of irregularities or issues you may have with the IRS and they normally will contact you via the US Mail system.
Also beware of people who call you acting as a charity or after a disaster as these individuals are normally after social security numbers and bank account numbers. And never give a donation to someone who says that you can claim the deduction on a previous year’s tax return as that is not possible as donations are only tax deductible in the year that you make the donation.
And scammers do not limit themselves to making contact via phone calls but also use emails to try and gain access to your personal information. Beware of any email that asks for personal information or send you to an official looking website that will collect your information. Many of these emails will state you have missing information from your tax return where they will use the information you provide to either steal your identity or file false tax returns to get fraudulent tax refunds in your name. Also beware of emails that claim that they will be able to settle a previous tax debt for pennies on the dollar or for a small percentage of what you owe. These individuals are out to steal your identity. As a rule the IRS does not correspond via email and they never ask you to reply to an email with personal information.
Just because it is tax season there is no reason to get stressed. Use your common sense if you receive suspicious calls or emails with people claiming to be with the IRS. Remember the IRS will usually contact you through the US Postal service. Never accept someone’s word they are with the IRS on a call no matter if they provide a phone number for you to call or a badge number which both can be faked with ease. If you do receive something and you have concerns call the IRS’s 1-800 number or go they www.irs.gov and send them an email on their website.
