INDIANAPOLIS — The 2023 Tax Season has officially begun and the Better Business Bureau is alerting the public of schemes that con artists will use over the next several weeks to take your money, personal information and peace of mind.
As the chaos of tax season picks up, scammers will capitalize on the pressure taxpayers face. The last day to file taxes this year is Tuesday, April 18.
Tax identity theft occurs when a scammer uses your Social Security number to file a tax return in your name and collect your federal or state tax refund. Scammers can steal your tax information in several ways. It could be a phony tax preparation service, a data breach, a hack, or a phishing scam, baiting you into clicking on a link in a text message which downloads malware to your device.
E-mail phishing scams appear to be from the IRS and include a link to a bogus Web site intended to mirror the official IRS Web site. These fraudulent e-mails will direct you to update your IRS e-file immediately, state a problem with your taxes, and sometimes mention USA.gov or a variation of the actual IRS site. Scammers want you to call the fake number in the e-mail or click on a link so they can download malware onto your device; or access your personal financial information.
IRS impersonation scams often start with a phone call and take two basic forms. In the first version, the IRS “agent” says you owe back taxes and pressures you into paying by prepaid debit card or wire transfer. Then, the scammer threatens you with arrest and fines if you don’t comply. In the other version, scammers claim they are issuing tax refunds and ask you for personal information so they can send you your refund.
“Ghost” shady tax preparers set up shop around tax time, usually in a vacant storefront. They will often promise tax filers large refunds quickly. Unfortunately, these “ghost” tax preparers are uncertified individuals who bypass checks and balances in the tax preparer certification system. Even more disturbing: the big refunds they promote are not calculated in legal ways.
Ghost tax preparers do prepare the tax return, but when it’s submitted to the IRS, these scammers ask the taxpayer to sign their own return, making it look like it was self-filed. This is a big deal; once something goes wrong, the preparer is nowhere to be found.
• The best way to avoid tax ID theft is to file your taxes as early as possible before a scammer can steal your information and file a fake tax return.
• Always check out a new tax preparer before you do business with them, and a great place to start is with BBB.org for ratings and reviews.
• Ask any tax preparer you are considering hiring what security steps they will take to protect your data.
• Check out Web sites carefully and make sure you access the real IRS Web site when filing your taxes electronically or inquiring for additional information.
• When in doubt, contact the IRS directly to verify any contact, not a number in an e-mail or text.
• The IRS will never threaten you or demand immediate payment, require a specific form of payment, or ask for credit card or debit card numbers over the phone.
• Be wary of a tax preparer offering fast refunds or significant returns. What you owe is solely based on your past year’s tax information and the current tax laws.
• Only allow funds to be deposited into your personal accounts. Some ghost tax preparers will have funds deposited into their accounts “to later be distributed.”
• Review your tax return before it’s submitted to ensure your tax preparer correctly signed it.
• Contact the IRS immediately if you get: a written notice from the IRS about a duplicate tax return, a notice stating that you received wages from a company that you never worked for or any notice that “additional taxes are owed, the refund will be offset, or a collection action is being taken against you.”
If you’ve spotted a tax scam (whether or not you’ve lost money), report it to BBB ScamTracker. Visit BBB.org or follow us @ChicagoBBB on social media.