The Most Common Tax Scams

4 Top Tax Scams to Avoid

Attention! You might be at risk for a tax scam! Read below to pick up some easy tips from LearnVest to make sure you're being safe and taking steps toward protecting yourself.

Tax fraud looks a lot like regular financial fraud — it costs you money and causes you a lot of frustration.

The good news is that if you're taking steps to protect yourself against identity theft and credit card fraud, then you're on the right track to preventing your tax refund, personal information, and money from falling into the wrong hands.

Related: A CPA Spills: The Biggest Tax Mistakes I See

But there's more you should know to prevent yourself from becoming a victim this tax season. Read on for the IRS's four top tax scams targeting people like you, how to prevent them, and what to do if you've already become a target.

Read on to find out how.

Identity Theft
Identity theft in the tax world is a little bit different than your average card scam, but can be just as frustrating. It happens in a couple of ways:

The first clue that this has happened might be when the IRS informs you by letter that two returns have been filed in your name (yet another reason to file early) or that you didn't claim all the income that you made at a restaurant in Texas — 400 miles away from where you live.

Because of the rise in tax identity theft, the IRS has ramped up its effort to combat it, putting in new processes for handling tax returns and new compliance filters to detect fraud, and aggressively investigating identity thieves. It's also piloting an initiative that requires taxpayers who have already been targeted to go through a supplementary verification process.

Still, identity thieves will continue to find workarounds, so stay vigilant with the following tips:

How to Prevent It
If your wallet is lost or stolen, or you've already been affected by other forms of identity theft, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490. Other steps to protect yourself include:

  • Not carrying your Social Security card or any document(s) with your SSN on it.
  • Only giving your SSN to businesses when required.
  • Protecting your financial information.
  • Checking your credit report every four months.
  • Securing personal information in your home.
  • Protecting your personal computers and mobile devices by using firewalls, anti-spam/virus software, updating security patches and changing passwords for Internet accounts on a regular basis.
  • Not giving personal information over the phone, through the mail, or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.

If This Has Happened to You
If you receive a letter from the IRS telling you that you filed two refunds or that you owe taxes or are due a refund from a year you did not file, respond immediately to the name, address, or phone number on the IRS notice. If you suspect the notice is not from the IRS, then contact the IRS Identity Protection Specialized Unit toll-free at 1-800-908-4490. You'll be asked to file a police report and fill out an identity theft affidavit. From there, the IRS will work with you to resolve the issue.

Alden Wicker

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