Tax Frauds: What To Lookout For In 2019 And How To Avoid Them

I hate to tell you this; tax scams aren’t going away!

Rather, scammers are devising more and better criminal methods to steal your tax returns.

In 2015, the IRS blocked 1.2 million authorized identity theft returns with a combined worth of about $7.2 billion.

In 2016, the IRS intercepted and blocked 787, 000 authorized identity theft returns which totals over $4 billion.

Yet, tax scammers walked away with a combined $21 billion via identity theft returns in 2016, according to a report by USA Today.

You shouldn’t wait until a scammer who is 10 million miles away steals your tax return and leave you with nothing to show for paying your taxes, before you make the right move.

These scammers are back again in 2019!

This year, scammers are better equipped than ever with more software and technology to steal from you and the IRS.

As you file your taxes in 2019, here are the tax frauds to watch out for:

Tax Scams To Watch Out For In 2019

Let’s see!

1. W-2 email Phishing Fraud

According to the IRS, scammers now have a new method of phishing for emails to use for tax returns identity theft.

These scammers are now running a W-2 email phishing scam tactic that has misled several companies into sending over W-2 forms for all their personnel.

Here’s how it’s done.

The scammers pretend to be an executive in the company, or even a CEO, and then send an email asking human resources or payroll for important W-2 data.

Once the scammer has the required data, he or she uses the information to file a fake tax return or sell the data to other fraudsters online or offline.

If you own a business, regardless of its size and the number of your workforce, make sure you verify every email that contains information requesting for sensitive data that could be used for identity theft.

If you’re an employee, you should inform your employer not to send any sensitive data on your behalf without asking you for verification.

One wrong move, and all your tax returns could be gone!

2. IRS iTunes Fraud

Tax scammers are exploiting every means possible to scam Americans off their refunds.

Now an increasing trend is the IRS iTunes scam.

How is it done?

You’d get a call from someone claiming to be from the IRS, and some of the calls could be spoof of 911 calling you and threatening you with an arrest if you fail to comply with their demands.

Once you fall for the trick, you’d be asked to put some amount of money on up to three separate iTunes cards using your debit card.

Then the scammers will ask you to read them the 16-digit code off the cards’ backs.

So they can easily and quickly access the money without any meaningful trace.

Once you read them the code, they’d disappear into thin air!

Warning: The IRS and the police will never ask you to send them any money via iTunes cards.

Anyone requesting for such in the name of the police or the IRS is a scam!

3. Arranged Fees Based On Arranged Returns

Take it or leave it…some tax preparers are fraudsters!

If your returns aren’t worth $7000 but your tax preparer claims he or she can get you a $7000 refund but will charge 10% of that as their fee, you should be aware that you’re dealing with a tax scammer.

Preparers’ fees depend on the amount of work it takes to prepare your return, not the hypothetical amount they can extort from the IRS. 

While the IRS may actually send you a return of $7000 as your tax preparer promised, it wouldn’t take long for the IRS to find out that you have no large donations to charities, don’t have four extra kids, or other fraudulent claims, and the IRS wouldn’t hesitate to request for their refund back.

Sadly enough, the preparer would have disappeared with your 10% while the IRS will be on your neck for the fake return.

Regardless of who is helping you to prepare your tax returns, the amount of your refund should only be slightly different.  

Don’t allow a tax preparer use you as a bait to steal from the IRS.

4. Surprise Refund Scam

Let’s face it…so many people are eager to get a notice of an unexpected tax refund…especially a huge sum of money.

Bad news is, fraudsters are secretly exploiting such people.  

Here’s how the scam works:

The fraudsters will send you an email that seemed as if it is from the IRS offering a refund of a certain amount of money.

However, to claim the refund, you will be required to enter your Social Security number and your bank account data so the supposed IRS can directly send the refund into your account.

One easy way to figure out this scam is that their website wouldn’t have the IRS.gov address.

Don’t fall for this scam!

5. Phishing Data From Public WiFi Network and Hotspot

It’s easy for people to steal your personal data from a public hotspot or a public WiFi network.

You should never make the mistake of filing your taxes from a public network such as the one on McDonalds or Starbucks.

If your job involves working with sensitive data, then you should get a VPN if you want to work when you’re travelling.

So when you log into a public WiFi network such as the one on the airport or a cafe, the VPN will protect your data from internet scammers.  

6. Sensitive Data Stolen From Tax Professionals’ Devices

Identity thieves are aware that tax preparers have a lot of sensitive data they can steal to file for other people’s tax refunds.

So tax professionals are often targeted by hackers. Tax preparers and CPAs get a lot of phishing emails from hackers who pose as software companies or IRS.

The IRS often warns tax experts about hackers efforts to hack into devices and computers to steal their clients’ sensitive data.

As such, all tax preparers and CPAs are expected to have effective cybersecurity software installed and working round the clock to stop intruders from accessing their personal computers and mobile devices.

Also, there are software that are designed to automatically log you out if you leave your computer system within a few minutes.

You wouldn’t want to leave your sensitive data open and easily accessible on your computer systems and devices.

It’s hard to tell who is watching from the other end.

7. IRS Phone Scam

Tax fraudsters have a way of using phone spoofing to make their numbers pop up as IRS.

Meanwhile, they already know the last 4 digits of your Social Security number which makes it easier for them to sound genuine.

So they’ll give you a call telling you there’s an emergency tax bill you have to pay instantly to the IRS or you’ll be arrested and probably end up in a courtroom.  

These scammers also use several other tactics that include:

  • Calling you a second time and pretending to be from the department of motor vehicles or from the police department and using a fake caller ID to back up their hoax.
  • Using fake IRS badge numbers and names
  • Sending fake IRS emails to back up their frauds

These tax fraudsters will ask you to make payment via wire or by a prepaid debit card.

WARNING: The IRS doesn’t reach out to anyone via phone requesting for money. Rather, the IRS contacts people exclusively via snail mail.

8. False Hostage Scam

This scamming method is well ahead of other tax fraud methods.

You’d get a call from someone claiming to be from the IRS asking for an unpaid tax bill and requesting that you pay instantly with prepaid cards.

To make their claims stronger, the caller would tell you that he is holding one of your loved one hostage, probably a spouse, a child or even a relative.

They’d mention the name of the relative and ask you to make the payment instantly to stop them from hurting your loved one.

Upon investigation, you will realize that the hostage situation is absolutely false. The scammer is just threatening you via the phone.

But how would you know?

All you have to do is call the police and the phone number of the person the scammer claimed to have as a hostage or the phone number of anyone close to that person.

The scammer would disappear without a trace of the call once they realize the police is involved.

9. Tax-refund Scam

It is no longer news that fraudsters have been stealing many Social Security numbers and then filing fake returns using the identities of those people.

These fraudsters often claim a low income with high deductions and they often file through the electronic method.

So when you decide to file for your own return, the IRS will turn it down, because someone else has filed and claimed your cash.

The entire twist often takes about 10 – 14 months period to resolve if you’re affected by this fraud.

The way out?

You can request for an identity PIN from the IRS before filing your taxes.

The IP PIN is used to authenticate the identity of a taxpayer in addition to the individual’s Social Security number. The PIN consist of a six digit number.

Once you sign up for the program, you can’t sign out. If you’re eligible, the IRS will send you a new PIN every year via the mail.

If you’re interested in the PIN program, you should visit this IRS page to get started.

10. Sudden Tax Preparers

Once its tax season, several different tax preparers pop up from nowhere and they are all over the place.

They set up their businesses suddenly and they report a loss on the tax returns of many people just to inflate their refunds.

So many people fall for this scam even police officers.

The easiest way out is to know who exactly is helping you prepare your returns and to review the returns yourself just before you file it.

To review your returns, you’re not required to understand every tax laws or anyone at all.

But you should know how many kids you have and if you have none or if you’re spending a lot on charity or not.

11. Forged Tax Bills Via The Mail

The IRS often reach out to taxpayers via the mail, so tax scammers have also learned to target people via the same method.

That said, the IRS often contact taxpayers via regular mail prior to making any other contact.

Many tax scammers now send out bogus tax bills via the mail too using what seem like an official IRS letterhead.

If you know you aren’t owing any tax or don’t owe the amount indicated on the bills, just know that you’ve been contacted by a fraudster.

You shouldn’t make the mistake of paying a suspicious bill without checking with the IRS.

Bottomline

Tax fraudsters are humans. So if they can learn to steal your returns, you can as well take measures to stop them.

These fraudsters have access to several different software and technology they can use for identity thefts and then file for tax returns.

Never enter your personal data into websites you don’t trust, including emails and snail mails requesting for sensitive data.

If it’s not IRS.gov, it’s a phishing website or platform and they are out to steal from you.

Worst still, the scammer who is trying to steal from you could be ten million miles away in Asia, Africa or Europe and tracing them might be impossible.

But you can play it safe by looking out for all the red flags mentioned in this article and keeping your sensitive data very personal.

Williams Oleije

Williams Oleije

Williams Oleije is an Inbound Marketer, and a pop culture enthusiast. He's an avid researcher about how digital media is transforming marketing in several industries.

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