As tax season approaches, it’s not just the looming deadlines that taxpayers need to worry about. Scammers are gearing up to exploit the confusion and stress that often accompanies filing taxes. The Internal Revenue Service (IRS) has been vigilant in warning taxpayers about various scams that can lead to financial loss and identity theft. Here are the top common IRS scams you should be aware of.
1. Employee Retention Credit Claims
Employee retention credit is a tax credit introduced by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help businesses retain employees during the COVID-19 pandemic. This credit is designed explicitly for eligible employers who have experienced significant revenue loss due to the pandemic.
To claim this credit, employers must meet specific criteria, including being in business since January 1, 2020, experiencing at least a 50% decline in gross receipts compared to the same quarter in 2019, and not receiving a Paycheck Protection Program loan. Employers can claim up to $5,000 per employee for wages paid between March 13 and December 31, 2020.
However, scammers are taking advantage of this situation and posing as IRS representatives, offering to expedite or increase the amount of these credits for a fee. These fraudulent claims can result in business fines and penalties and potential legal action.
The IRS has issued warnings about these scams and advises employers to be cautious when providing personal information or paying any fees for claiming employee retention credits. The agency has also reminded taxpayers that they do not initiate contact via email or phone requesting personal or financial information.
It is essential for businesses to carefully review all correspondence from the IRS before responding or taking any action. The official website of the IRS is irs.gov, where taxpayers can find legitimate resources and information related to tax credits and other programs available during these challenging times.
In addition, employers must keep accurate records of all wages paid during the eligible period as proof when claiming employee retention credits. These records should include payment dates, amounts spent, the number of employees receiving wages during this time frame, and evidence of significant revenue loss.
Employers should also be aware that there are no shortcuts or special services offered by third parties that can speed up or guarantee approval of their claims. Any offers promising such services should be viewed with suspicion and reported to the IRS immediately.
Businesses should be vigilant when claiming employee retention credits and avoid falling victim to scammers. By following the guidelines set by the IRS and keeping proper documentation, employers can successfully claim this credit without any risk of fraud or penalties.
2. Phishing Tax Scams
Phishing tax scams are becoming increasingly common and sophisticated, making it more critical than ever to stay vigilant against potential fraud. Whatis phishing? Phishing is an online scam where criminals attempt to gather sensitive information such as passwords, credit card numbers, and social security numbers by posing as a legitimate organization or business. In the case of IRS scams, criminals will impersonate the Internal Revenue Service (IRS) to steal personal and financial information from unsuspecting victims. They often use fear tactics and urgency to pressure individuals to provide sensitive information.
One standard method used in phishing tax scams is through email communication. Scammers will send fraudulent emails that appear to be from the IRS, claiming that there is an issue with the recipient’s taxes or that they are eligible for a large tax refund. The email may contain official-looking logos and language designed to trick individuals into clicking on links or downloading attachments that can infect their computers with malware.
Another tactic used by scammers is phone calls. These fake agents will call individuals, claiming to be from the IRS and demanding immediate payment for outstanding taxes. They may threaten legal action if payment is not made immediately or request personal information over the phone.
It is important to note that the IRS will never contact taxpayers by email, text, or social media regarding personal tax matters. If you receive any communication claiming to be from the IRS through these channels, it is most likely a phishing scam.
Protecting Yourself from Phishing Tax Scams
To protect yourself against phishing tax scams, always be cautious when sharing personal information online. Never click on links or open attachments from unknown sources, and do not provide personal information over the phone unless you initiate contact with a reputable source.
In addition, it’s essential to regularly monitor your financial accounts for any suspicious activity and report any unauthorized charges immediately.
If you believe you have been a victim of a phishing tax scam or have received suspicious correspondence pretending to be from the IRS, you should report it to the IRS directly. You can also file a complaint with the Federal Trade Commission (FTC) and consider placing a fraud alert on your credit report.
Phishing tax scams are a severe threat that can result in financial loss and identity theft. By staying informed and vigilant against these fraudulent activities, you can protect yourself and your finances from falling victim to these criminals. Remember always to verify the legitimacy of any communication claiming to be from the IRS before taking any action or providing personal information.
3. Online Account Help from Third-Party Scammers
In recent years, there has been a rise in the number of third-party scammers targeting individuals with fake offers of online account help from the Internal Revenue Service (IRS). These scammers often pose as legitimate IRS representatives and use tactics to trick unsuspecting victims into giving away their personal and financial information. It is essential to be aware of these scams and know how to protect yourself from falling victim.
One common scam involves receiving an unsolicited email or phone call claiming to be from the IRS. The scammer may assist with setting up an online account for tax purposes or declare a problem with your account that needs immediate attention. They may also ask for personal information such as your Social Security number, bank account details, or credit card information. However, it is essential to note that the IRS will only initiate contact through email or phone calls with prior notice through official channels.
Another Website Scam
Another tactic these scammers use is creating fake websites resembling the official IRS website to collect sensitive information from unsuspecting users. These websites may ask you to enter your login credentials for your online tax account or provide payment for services offered by the scammer. It is crucial to always double-check the URL of any website before entering any personal information and only use official IRS websites for any tax-related tasks.
If you do receive an unexpected call or email claiming to be from the IRS offering online account help, it is best to verify its authenticity before taking any action. You can do so by calling the official IRS helpline at 1-800-829-1040 and confirming if they have tried contacting you regarding your account. Additionally, you should only give out personal information over the phone if you are sure who you are speaking with.
It’s also important to note that these scammers are becoming increasingly sophisticated and may even use caller ID spoofing techniques to make it seem like they are calling from an official IRS number. Therefore, it is crucial to be vigilant and always err on the side of caution when dealing with unsolicited requests for personal information.
Awareness of these IRS scams involving third-party scammers offering online account help is imperative. Always remember to verify the authenticity of any communication claiming to be from the IRS and only give out personal information if you are confident about who you are speaking with. By staying informed and cautious, you can protect yourself from falling victim to these scams and keep your personal information safe.
4. False Fuel Tax Credit Claims
The fuel tax credit is a legitimate tax deduction that allows taxpayers to claim a refund for the federal excise taxes paid on gasoline, diesel, and other fuels used for business purposes. However, like any other tax break, some unscrupulous individuals try to take advantage of this credit by making false claims. These false fuel tax credit claims can result in severe consequences such as penalties, interest, and criminal prosecution.
One common scam involves taxpayers claiming the fuel tax credit without having any eligible business use for the fuel. This means they falsely report using the fuel for business purposes when it was used for personal vehicles or non-business activities. The IRS has strict guidelines on what qualifies as an eligible business use for the fuel tax credit, and any deviation from these rules can raise red flags and trigger an audit.
Another tactic scammers use is inflating the fuel purchased or claimed as a deduction. For example, a taxpayer may claim to have bought more gallons of fuel than their vehicle’s tank capacity would allow or claim large amounts of fuel purchases that cannot be substantiated with receipts or records. The IRS quickly detects this type of fraud through its data-matching systems, which can lead to significant penalties.
In some cases, fraudulent preparers may also convince unsuspecting taxpayers to make false claims for the fuel tax credit in exchange for a larger refund. These preparers often target low-income individuals desperate for extra money and may need to be made aware of all the eligibility requirements for this credit.
It is important to note that even if you use a third-party service provider to file your taxes, you are ultimately responsible for all information in your return. Therefore, choosing reputable and trustworthy professionals when seeking assistance with your taxes is crucial.
To avoid becoming a victim of false fuel tax credit scams, it is essential to understand all eligibility requirements set by the IRS. You must have records to support your claims, such as receipts and mileage logs, and be able to prove that you used the fuel for business purposes. Additionally, being cautious of unsolicited offers promising large refunds or anyone who pressures you into making false claims is vital.
While the fuel tax credit can provide a significant deduction for eligible taxpayers, avoiding falling prey to false fuel tax credit scams is crucial. By staying informed and following IRS guidelines, you can protect yourself from the potential consequences of fraudulent activities. Remember, if something seems too good to be true, it probably is.
5. Unscrupulous Tax Return Preparers
The world of taxes can be complex and overwhelming, so many people turn to tax return preparers for assistance. These individuals or companies aimed to help taxpayers navigate the complicated tax filing process. However, not all tax return preparers have your best interests in mind. Some unscrupulous individuals take advantage of unsuspecting taxpayers for their gain.
These unscrupulous tax return preparers often use deceptive tactics to lure clients and make false promises about getting them a larger refund or minimizing their tax liability. They may even go as far as falsifying information on a taxpayer’s return without their knowledge, leading to severe consequences. This type of behavior is not only unethical but also illegal.
One common scam these unscrupulous preparers use is the “ghost” or “shell” company scheme. In this scenario, they will create fake businesses and expenses on taxpayers’ returns to reduce their taxable income and increase their refund. They may also claim fake deductions or credits the taxpayer is not eligible for to inflate their refund amount.
Another tactic these fraudulent preparers use is charging excessive fees for their services. They may offer low upfront costs but then tack on additional fees throughout the process, making it difficult for clients to track their pay. Some may also pressure taxpayers into signing blank documents or giving them access to personal information such as social security numbers, which can lead to identity theft.
It’s important to note that not all tax return preparers engaging in these activities are intentionally trying to defraud clients. Some may lack proper training or knowledge about tax laws and procedures, which can lead to errors on returns that could result in penalties for the taxpayer.
Protecting Yourself from Common IRS Scams
To protect yourself from falling victim to an evil tax return preparer, you must thoroughly research before hiring someone to assist you with your taxes. Look for reputable, experienced preparers with a valid Preparer Tax Identification Number (PTIN) from the IRS. You should also ask for references and check their credentials before handing over personal information or documents.
In addition, it’s essential to carefully review your tax return before signing it and submitting it to the IRS. Ask questions about discrepancies or suspicious entries, and never sign a blank document or one containing false information.
By being aware of these unscrupulous tax return preparers and taking necessary precautions, you can avoid becoming a victim of their fraudulent activities. Remember, always trust your gut instinct; if something seems too good to be true, it probably is. Stay vigilant and protect yourself from falling prey to these scams.
Need IRS Help? Trust Beck + Ibarra – DFW’s #1 CPAs
If you find yourself in a situation where you need help navigating the complex world of taxes and dealing with the IRS, look no further than Beck + Ibarra. Our team of certified public accountants (CPAs) has been serving the Dallas-Fort Worth (DFW) area for years and has earned a reputation as the go-to experts in all things related to taxes and the IRS.
One of our top priorities at Beck + Ibarra is protecting our clients from falling victim to IRS scams. Unfortunately, these scams are becoming increasingly common and sophisticated, making it even more critical for individuals and businesses to stay informed and take preventive measures. Our CPA team at Beck + Ibarra is well-versed in identifying potential red flags that may indicate an IRS scam. We keep up-to-date with the latest tactics used by scammers so that we can better assist our clients in avoiding them.
When it comes to protecting yourself from IRS scams, knowledge is critical. That’s why we offer personalized consultations where we educate our clients on common scams. Plus, we share tips on safeguarding against them. We also guide you on what steps to take if you suspect you have been targeted or have fallen victim to common IRS scams. At Beck + Ibarra, we understand that dealing with the IRS can be overwhelming and stressful. That’s why we offer comprehensive services tailored specifically for individuals and businesses who need help resolving tax issues or responding to notices from the IRS. Our team will work closely with you every step of the way. We ensure that your rights are protected while working towards a favorable outcome.
With Beck + Ibarra by your side, you can rest assured that experienced professionals handle your tax matters with your best interests in mind. Our track record speaks for itself – we have helped numerous clients successfully navigate through challenging situations with the IRS. Don’t risk falling victim to common IRS scams or facing the consequences of not correctly addressing tax issues. Trust Beck + Ibarra – DFW’s #1 CPAs – for all your IRS help needs. Contact us today to schedule a consultation, and let us help you find peace of mind regarding taxes and the IRS.
