It’s Tax SCAM Season

By Venar Ayar, J.D., LL.M.

It’s an unfortunate fact of modern life that we need to protect ourselves and our most vulnerable loved ones from con games aimed at stealing our money and valuable personal information. These kinds of schemes are a danger throughout the year, but tax season seems to be an especially busy season for fraudsters.

In fact, the IRS recently released a bulletin warning of a likely increase in scams. They say that criminals will try to impersonate IRS agents in text messages, e-mails and even on the telephone. Their goal is to steal money, or sensitive personal information with which these crooks can take tax refunds, ruin credit ratings, and cause other financial injuries.

The following are some tips for defending against some of the most common scams: Don’t click on links or attachments in texts or unsolicited emails that claim to come from the IRS, state tax agencies, or other tax authorities. The IRS doesn’t use texts to discuss personal tax issues, such as bills or refunds. They don’t send people messages on social media platforms, and they don’t use email to request personal or financial information. Most IRS contacts will arrive via regular mail delivered by the U.S. Postal Service.

Do not respond to phone messages that sound urgent and may threaten you with arrest, deportation or losing your licenses if you don’t call back. Criminals can fake or “spoof” caller ID numbers to appear to be anywhere in the country, including from an IRS office, so don’t be fooled. There are some circumstances when the IRS may call a home or business, such as when a taxpayer has an overdue tax bill or delinquent tax return. But before the IRS calls, they’ll send several letters in the mail.

Only make checks for taxes payable to the U.S. Department of the Treasury or to your state, and never to third parties.

Never make tax payments over the phone or provide your credit card information to someone claiming to be from the IRS. The IRS will not ask for credit or debit card numbers over the phone. And they won’t demand immediate payment using a specific payment method like prepaid debit card, gift card or wire transfer. Also, the agency lets taxpayers question or appeal the owed amount, so don’t allow yourself to be pressured over the phone.

If you think you may owe the IRS money, you can examine the balance in your online account (https://www.irs.gov/payments/your-online-account).

Unemployment Fraud

As if COVID-19 hasn’t disrupted enough lives on its own, there has been an increase in unemployment fraud during the pandemic. Organized criminals and other thieves have been using stolen personal information (birth dates, social security numbers, addresses, etc.) and filing false unemployment claims in other people’s names.

People may not even know they’ve been a crime victim until tax time, when they receive a 1099-G tax form that details unemployment compensation they never received. They may even receive a form from a state in which they did not file for benefits. Unemployment benefits are taxable income at the federal level, and in most states. Workers who get an inaccurate 1099-G should report it to the issuing state agency and request a corrected Form 1099-G.

If You Believe You Are a Victim of Tax Fraud

Taxpayers may only discover identity theft when filing a tax return electronically and learn that a return has already been filed with their Social Security Number. They may also receive a letter from the IRS about a suspicious return filed with their SSN.

If it happens to you, the IRS recommends taking several steps, beginning with immediately responding to any IRS notice you receive in the mail. Call the number provided in that mailing. As I wrote earlier, the IRS will contact you using the regular mail delivered by the U.S. Postal Service. Even if they were to call, they will first send at least one letter.

Next, continue to pay taxes and file your tax return, even if you must do so by paper. Remember that a paper return is likely to delay processing and refunds.

If your e-filed tax return has been rejected because of a duplicate filing under your Social Security Number, or if you’re instructed to do so by the IRS, complete and submit IRS Form 14039, Identity Theft Affidavit. Print and attach the form to a paper return and mail according to the instructions.

If you’ve previously contacted the IRS about tax-related identity theft but didn’t have a resolution, you should call 1-800-908-4490 for specialized assistance.

If you’re a victim of identity-theft, you should also consider checking your credit report for suspicious activity or unauthorized lines of credit. You can request a free credit report every week through AnnualCreditReport.com or by calling 1- 877-322-8228. You should also freeze your credit to protect against anyone opening new accounts in your name.

There is more information available from the IRS at: https://www.irs.gov/identity-theft-central.

Venar Ayar is the founder and Principal Attorney at Ayar Law, a Farmington Hills, Michigan based law firm specializing in Tax Law for individuals and businesses.