Clients Beware: 7 Tax Scams to Watch Out for in 2020

Each year, thousands of people lose millions of dollars, not to mention their personal information, in these schemes. Typically, the new scams are variations on old themes but are even slicker than before and harder to detect.  

Dec 18th 2019
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Beware tax scams
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‘Tis the season for tax scams. As the time for filing 2019 tax returns fast approaches, the IRS is again warning taxpayers and tax practitioners alike to watch out for several prevalent tax scams. Each year, thousands of people lose millions of dollars, not to mention their personal information, in these schemes. Scammers might use the regular mail, telephone or email to set up their victims. 

Typically, the new scams are variations on old themes but are even slicker than before and harder to detect. Here are seven common examples:

1. Social Security Numbers: In the latest twist on a scam related to Social Security numbers (SSNs), the crooks claim to be able to suspend or cancel the victim’s SSN. It’s another attempt by con artists to frighten people into returning “robo” voice mails. One a scammer has your SSN, he or she can use it for illegal gain or even file for a tax refund under your name.

2. Natural Disasters: The IRS reminds taxpayers that scammers may try to take advantage of the generosity of taxpayers who want to help victims of major disasters. Don’t contribute to a cause, no how worthy it seems, without thoroughly checking it out first.

3. E-Mail Impersonations: A vicious email scam debuted last year. The scammer sends you an e-mail with an IRS.gov-like website pretending to be about the taxpayer's refund, electronic return or tax account. The emails contain a "temporary password" to "access" the files needed to obtain the refund or information. But when taxpayers click on the link, it turns out to be a malicious file.

4. Taxpayer Advocate Service: The IRS has warned the public about an impersonation phone scam whereby criminals fake calls from the Taxpayer Advocate Service (TAS). Calls may be robo calls that request a call-back. Once someone returns the call, the con artist requests his or her personal information.

5. Ghost Tax Return Preparers: By law, anyone who is paid to prepare or assist in preparing federal tax returns must have a valid Preparer Tax Identification Number (PTIN). But ghost preparers don’t use a PTIN to sign off on returns. Instead, they just print the return and have the taxpayer sign it. According to the IRS, these unscrupulous individuals hope to make a fast buck by promising a big refund or charging fees based on a percentage of the refund.

6. Telephone Threats: Callers claim to be IRS employees, using fake names and bogus IRS identification badge numbers. Victims are told they owe money to the IRS and the debt must be paid promptly through a gift card or wire transfer. The targets may be threatened with arrest, deportation or suspension of a business or driver’s license. Many cave in.  

7.  Tax Transcripts: The IRS has pointed to a surge of fraudulent emails that impersonate the agency and use tax transcripts as bait to entice users to open documents containing malware. This scam is especially problematic for businesses whose employees might open the documents without knowledge of the scam. The malware can then spread throughout the company’s network and take months to remove.

Reminder: The IRS doesn't initiate contact with taxpayers by phone, email, text messages or social media channels to request personal or financial information. Recognize the telltale signs of a scam and warn your clients about the dangers.  

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