How to Avoid Tax Scams
Tax season is right around the corner and scam artists are getting ready for another opportunity to take advantage of those who are not paying attention. Do not fall into that trap. Tax season is stressful enough, without falling victim to a tax scam and having to spend even more time resolving it. There are numerous tax scams out there and the internet is making scams more prevalent than ever. The trick is to be on the lookout for anything suspicious and simple signs that something is not quite right.
The most common type of tax scam is phishing, which can come in the form of fake or phony emails sent directly to your inbox. Scam artists may take the identity of a trusted source like a bank or well-known business and ask you to provide personal (and confidential) information. They may even pretend to be an IRS agent and ask for social security numbers or bank account information.
How do you protect yourself from phishing? Well, for one thing…the IRS NEVER communicates by email. Other suspicious emails may be harder to detect, but as a general rule, most reputable companies no longer ask for social security or private information by email. If a scam artist gets their hands on your social security number, they can file a fake tax return and try to claim your refund.
Tax Preparation Scams
In addition to phishing scams, there are also many scams run by people who claim to be able to help you prepare your tax return. For example, if a tax preparer charges a percentage of your refund as their fee, you should be very suspicious and not move forward with a working relationship. This type of fee structure gives the tax preparer an incentive to inflate your refund and puts you at a higher risk of audit. As a general rule, you should consider only using a tax preparation company that is well known and is registered with the IRS. A Better Business Bureau seal is also a plus.
Refund Anticipation Loans
Another way scam artists prey on the public is by offering refund loans BEFORE your refund arrives. A business may offer you a short term loan as a way to give you your refund before the IRS sends it to you. That means you are paying a portion of your refund as a fee to the loan company. In the age of electronic filing (and the IRS can often process refunds in a matter of 1-2 weeks), it is always best to receive the money from the IRS directly rather than trying to get your hands on it early.
Protect Yourself from Tax Scams
The best way to protect yourself from these and other tax scams is to do your homework and to not give out personal information unless you are certain of who you are giving it to. In addition, the IRS provides the most up to date information on current scams on their website. In addition, there are many reputable tax firms that are committed to providing their clients with honest advice and guidance. If you are looking for such a company, give Success Tax Relief a call at (877) 958-6638. We have over 30 years of experience helping people resolve tax debts and other issues and are here to help you, too.