Tax season brings out the best in reputable accounting firms and tax preparers. Unfortunately, it brings out the worst in scam artists and unscrupulous preparers.
You have probably seen the news reports about the elderly receiving threatening phone calls from someone claiming to be from the IRS, insisting that money be sent immediately to avoid prosecution. This is one of several con games being propagated by scam artists in recent months.
The first and most important thing to know is that the IRS never calls or emails a taxpayer about an urgent issue. The IRS only notifies tax payers in writing, by mail, when there is a serious issue that needs to be addressed. This includes requesting corrected contact information. Second, an IRS letter always outlines procedures to comply with or contest findings that might require submission of payment. Any demand for immediate payment, or insisting on a certain method of payment (such as prepaid debit card), are red-flags of a potential scam.
Bogus emails have become quite common, requesting payment or personal information, or requesting you follow a link which could result in stolen personal information. Do not give out your Social Security, Tax Identification number or banking information via email on a website or by phone just because you are asked to. Take time to verify any such request before responding.
If you are contacted by someone claiming to be from the IRS you can call 1-800-829-1040 for verification. You may want to contact your tax professional to assist you in determining what, if anything, needs to be done. Not only could this prevent being taken in by a scam artist, but your tax professional might be able to remedy a valid IRS issue in your favor.
Not only do you need to be wary of attempts to steal your identity or your personal information, but you should watch out for potentially criminal tax fraud situations.
One in specific we have seen the last couple of years involves identity theft. Criminals file fraudulent tax returns using stolen Social Security numbers. Potential refunds are directed to an account under the criminal’s control. This might be discovered when you attempt to file your valid return, or worse, when you don’t receive an anticipated refund. You can check the status of your refund at http://www.irs.gov/Refunds.
Unscrupulous tax preparers might attempt to involve you in a tax fraud scheme. Be wary of anyone promising inflated refunds without reviewing your return first, request you to sign a blank return, charge preparation fees based on a percentage of the refund, offer instant wealth or exemption from your tax obligations. Tax fraud is a crime with potentially serious financial and legal consequences. The IRS Criminal Investigation division aggressively pursues tax fraud and has one of the highest conviction rates in federal law enforcement.
The best way to avoid being involved in a tax fraud scheme or a scam is to guard your personal information closely and to contact a reputable accounting firm or tax preparer to prepare your returns or to respond to contact from someone claiming to be from the IRS. Included below are links to articles to help you with this process. You might also want to ask a trusted friend or business associate for a referral.
If you have any questions or concerns you might be a victim of tax fraud, please feel free to contact one of our CPAs at (616) 642-9467 or request a complimentary accounting consultation.