Three Tips to Protect Against Scams During Tax Season

Tax-related scams have continued to be a problem for many Americans. Scammers will use common methods to obtain sensitive personal and financial information from individuals through phone calls, text messages, and email. It’s important to know about scams targeting hard-earning taxpayers like yourself before falling victim to one. 

Phishing & Smishing 

Have you ever received a suspicious-looking email or text message? Tax-related phishing scams are an email sent by fraudsters claiming to be from a legitimate organization such as a state or federal tax organization or a financial firm. Tax-related smishing scams are a text message sent by fraudsters that uses very similar methods to phishing. 
Phishing and smishing scams involve a variety of tricks, such as offering victims a false tax refund or threatening them with legal action for tax fraud. Scammers might create a sense of urgency to try and get a response from the victim, such as ‘Your account is on hold’ or ‘There has been unusual activity on your credit report’. Responding to any suspicious communication claiming to be from credible organizations can potentially harm your private information and electronic devices. 

Beware of Fake Charities

Scammers try to prey on potential donors by posing as fake charities and obtaining private information that can be used in identity theft. Taxpayers who give money to a charity can claim a deduction on their tax return, but charitable donations only count if they go to qualified tax-exempt organizations. Here are ways to protect yourself against fake charity scams:

• Scammers may use phishing emails or change their caller ID to impersonate an actual charity. 
• Pressuring people to make an immediate payment is a common tactic for scammers, but legitimate charities are able to receive donations at any time. 
• Confirm the charity’s name, website, and mailing address before making a donation.
• Be wary of charities that request donations in the form of a gift card or by wiring money. It's safer to pay by credit card or check after confirming the charity is legitimate.

Choosing Credible Tax Professionals

Because taxpayers are trusting someone with handling their private information, a tax professional should be chosen very carefully. Most tax professionals provide a service built on credibility, but there are some unethical methods that taxpayers should try to avoid. 
A major red flag is when the tax professional is completing a tax return and won’t sign the IRA Preparer Tax Identification Number (PTIN), which is required by law. This situation leaves taxpayers responsible for any misinformation on their tax returns. Other common malpractices to look out for are when a tax professional is asking for a payment that’s cash only, creating false income, claiming fake deductions to try to get their clients a higher tax refund, or misdirecting refunds into their own account.