Avoiding Tax Scams Heading into Tax Season

Courtesy 123rf.com

It’s National Tax Security Awareness Week.

Last year, the Better Business Bureau processed approximately 2,400 complaints (nationally) against tax return preparation services and related businesses (including accountants). For those complaints, the median disputed amount was $500.

Tax-related scams are even more prevalent. In 2017, BBB received approximately 3,500 reports to their Scam Tracker from consumers reporting con artists claiming to be with the IRS. This is a very common type of impostor scam.

This scam tends to rely on tactics such as intimidation (such as threats of arrest), isolation (to keep victims from talking to their family members about the supposed tax issue), and/or pressure to act/pay quickly.

The IRS also noted in their recent press release that they’ve seen a massive increase in phishing scams, citing a 60 percent increase since last year. These schemes can endanger a taxpayer’s financial and tax data, allowing identity thieves a chance to try stealing a tax refund. The emails often contained “IRS Important Notice” or “IRS Taxpayer Notice” in the subject line to appear legitimate, but were not coming from the IRS.

However, the news isn’t all bad. The IRS reported a steep decline year over year in successful tax-related identity theft cases. This is the second year in a row that ID theft has decreased.

Here are some key ways consumers and business owners can combat tax fraud:

  • Protect personally identifiable information (PII) such as birth date, Social Security numbers, bank accounts, tax-related information and financial records.
    • This speaks to our tips on cybersecurity and the importance of maintaining strong passwords, updated software, verifying the source of emails and using two-factor authentication where possible.
    • Know that accountants and tax professionals have a legal duty to have sound cybersecurity protocols in place and must meet certain data security requirements in regards to client information.
  • Understand how tax scams work and be on guard for “red flags” such as calls or emails from the IRS, especially those that demand immediate payment, include threats or intimidation, or ask for payment requests via wire transfer, prepaid debit card, or gift card.
    •  The IRS only contacts consumers via postal mail.

Check out BBB Scam Tips for more information: BBB.org/TaxScams.

For more information from the IRS and to see in detail all of the efforts around tax security for consumers and business owners, click here.

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