Tax scammers have various ways to cheat both taxpayers and the IRS. From stealing the identity of the recently deceased to scamming the elderly, their unscrupulous acts have the IRS on its toes. In spite of the efforts of the IRS, billions of dollars are lost each year due to tax scams. Tax Defense Network measures the scale of tax scams and the IRS' efforts to curb them.
Tax Defense Network: Tax Scam by Prison Inmates
Tax scams by prison inmates are growing. In 2012, the IRS discovered more than 173,000 false tax returns filed by prison inmates. In 2010, the number was less than half of that. According to the Inspector General's office, in 2010, it found $130 million in false tax refund claims. The office recorded that the IRS sent more than $9 million in homebuyer tax credits to prison inmates.
Tax Defense Network: IRS' Scam Reduction Efforts
The IRS relies on prison data to help spot fraudulent tax returns filed by inmates. The accuracy of prisoner information they receive is important in detecting and stopping fake tax return claims.
According to the IRS, it stopped $2.5 billion in fraudulent tax refunds by prison inmates in 2012. To help curb the fraud, new federal reporting requirements were introduced for federal and state prisons. The IRS has also considered teaming up with banks to catch refund scams by prison inmates.
Tax Defense Network: E-Mail Scam
Tax scammers keep discovering new ways to scam people through ID phishing because taxpayers have gotten wise about their old methods. The newest e-mail scam uses a Treasury Department's EETPS (Electronic Federal Tax Payment System) imitation to get taxpayers' personal information. The e-mail claims to be from the IRS Antifraud Commission, a non-existent group, and informs taxpayers that their credit card has been enrolled in an EETPS bank account, explaining that their funds are being lost and corrective action needs to be taken by clicking on the link within the e-mail.
Taxpayers who fall for the trap must inform the IRS immediately to stop fraudulent tax returns from being filed in their name. Those that do not discover the tax scam right away find out about the fraud after their tax refund does not reach them.
Tax Defense Network: Scam Alert from the IRS
Any email supposedly by the IRS is a scam and can be reported at [email protected] The IRS never initiates contact with taxpayers through email, text messaging, or social media to request personal or financial information.
Even though the IRS informs taxpayers about suspicious emails, identity theft schemes, and phishing scams on their website, the U.S. Government Accountability Office disclosed that from January to September 2012, there were around 642,000 identity theft cases concerning tax fraud.
Tax scam, Tax Defense Network believes can only be reduced with the combined efforts of law enforcement agencies and taxpayers. Catching the scammers and avoiding falling into their trap can limit, if not eliminate, the problem.