Beware of Tax Scams: How to Protect Yourself This Tax Season

Tax season is here, and while many of us are focused on filing our returns and securing our refunds, there's something far more sinister happening in the background: scams.

Despite the ever-changing landscape of layoffs, budget cuts, and corporate uncertainty, one thing remains constant—fraudsters are relentlessly targeting taxpayers, especially during tax season.

The Internal Revenue Service (IRS) has issued a stern warning about the latest scams making the rounds. Scammers will stop at nothing, using deceptive tactics to steal personal information, inflate tax refunds, and mislead taxpayers into believing they're entitled to credits or deductions they’re not qualified for.

In a recent statement, Terry Lemons, Senior Adviser for IRS Communications, emphasized, "Scammers are relentless, and they use the guise of tax season to try tricking taxpayers into falling into a variety of traps. These red flags can lead to everything from identity theft to being misled into claiming tax credits for which they're not entitled."

Here’s a closer look at some of the most common and dangerous scams to watch out for this year:

1. Fake Emails and Text Messages

Scammers often impersonate trusted organizations like the IRS, state tax agencies, and tax software companies. These phishing emails and smishing texts promise fake refunds or threaten criminal charges for tax fraud. Phrases like, "Your account has been put on hold" or "Unusual Activity Report" often accompany a malicious link meant to steal your information.

2. Social Media Tax Advice

While platforms like Facebook and TikTok are fun for socializing, they’re not the place to get tax advice. Unfortunately, inaccurate tax tips, including improper guidance on forms like W-2s, are being shared widely on these platforms. Following such advice could lead to serious consequences, including identity theft.

3. Bogus Offers to Help Set Up IRS Online Accounts

Some fraudsters pose as helpful third parties, offering to assist taxpayers in setting up an IRS Individual Online Account. This account is free to create, but scammers use it as an opportunity to steal personal information and submit false tax returns on the victim's behalf.

4. Fake Charities

Scammers often create fake charities around tax time, preying on people’s desire to donate. Remember, you can only claim a charitable deduction if the organization is recognized by the IRS as a tax-exempt entity. Be sure to verify a charity’s status before donating.

5. Misleading Claims of Fuel Tax Credits

Some scammers target taxpayers by convincing them they’re eligible for the Fuel Tax Credit, which is only available for off-highway business and farming use. These fraudsters claim the credit is available to everyone, which is far from the truth.

6. Incorrect Sick Leave and Family Leave Claims

Despite the fact that the Credits for Sick Leave and Family Leave were only available for the self-employed in 2020 and 2021, scammers continue to mislead taxpayers into using Form 7202 to claim these credits when they don’t qualify.

7. The "Self-Employment Tax Credit" Scam

Social media continues to be a breeding ground for misinformation, with some posts claiming a "Self-Employment Tax Credit" for gig workers and the self-employed. This non-existent credit is being marketed to taxpayers in a way that suggests they can receive large payments, which is not the case.

8. Inventing Household Employees

In another scam, taxpayers falsely claim household employees and file Schedule H to receive refunds based on fabricated sick and family medical leave wages. These deceptive claims are a form of tax fraud.

9. Fake W-2s and 1099 Forms

Some scammers encourage taxpayers to submit false W-2s or 1099s with inflated income figures or fake employers. This scheme aims to get fraudulent refunds, but it’s illegal and could have serious consequences.

10. Offers in Compromise (OIC) Scams

Offers in Compromise (OIC) can help taxpayers settle their tax debt for less than the full amount owed, but scammers continue to push these offers to people who don’t qualify, often charging exorbitant fees for services that should be free through the IRS.

11. Ghost Tax Preparers

If a tax preparer refuses to sign your return or provide a Preparer Tax Identification Number (PTIN), they're likely a "ghost preparer." These scammers charge fees based on the size of your refund and often leave taxpayers responsible for errors on their returns.

12. Cybercriminals Posing as Clients

A newer scam involves cybercriminals impersonating potential clients to trick tax professionals into responding to emails. Once the preparer responds, the scammer sends a malicious link or attachment that could compromise their system and expose client data.

How to Protect Yourself from Tax Scams

To protect yourself during tax season, the IRS recommends being cautious and aware of red flags. Here are a few tips to keep in mind:

• Verify Sources: Always verify the legitimacy of emails, texts, or social media posts before acting on them. The IRS will never contact you via email or text to ask for sensitive information.

• Be Careful with Personal Info: Never share personal details like your Social Security number or bank account numbers over email or text.

• Choose Reputable Tax Professionals: Work with tax professionals who are reputable and provide a valid PTIN. Always ask about their qualifications and check for any red flags.

• Report Suspicious Activity: If you receive suspicious communications or fall victim to a scam, report it to the IRS and the Federal Trade Commission (FTC).

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With so many scams out there, it’s important to stay informed and vigilant. If you need help navigating tax season or ensuring your returns are filed correctly and securely, Silvers Financial Services is here to help. Our team of trusted experts provides reliable tax preparation, advice, and support, ensuring you don’t fall victim to fraud this tax season. Let us handle your tax needs while you focus on what matters most. Reach out to Silvers Financial Services today and safeguard your financial future.