Don’t Fall Victim to Tax Scams

While tax season is still months away, tax scammers operate year round. As such, it's a good idea to familiarize yourself with some of the more pervasive schemes designed to empty your pockets. You can't ever be 100% prepared for fraudsters, but you can definitely take steps to avoid falling victim to their activities.

Tax fraud has, believe it or not, become a multi-million dollar endeavor. Taxpayers and the IRS itself have become targets for exploitation, despite major efforts made to curb scammers' activities. Take a look at some of these common scenarios that can leave your identity compromised or cheat you out of hard-earned money:

The Doomsday Call

Most people shudder at the thought of being confronted with the IRS, and that's precisely what some scammers attempt to exploit. Case in point: you may receive an urgent call from someone claiming to be an IRS agent. This person may inform you that you have a tax debt which, if you do not pay immediately, will lead to your arrest, deportation or some other legal threat.

The caller may become aggressive, warning that you have a matter of hours before someone from local law enforcement will be by to collect you. The goal is to scare you into sending money, typically via prepaid debit card, to a location designated by the scammer. You should disregard any such call, as the IRS will not attempt to reach you by phone. Further, they will not threaten to arrest you because you didn't pay your tax bill. As convincing as they may sound, don't take the bait.

The Invalid Notice

Some fraudsters have a more insidious method to lure you into their trap; you may receive a fake IRS notice which will urge you to take action and pay a supposed tax balance. The fake notice may even include some of your personal information and duplicate official IRS logos to sell the lie.

Here again, you will likely be instructed to satisfy your debt using a specific payment method (one that's difficult to trace). Since you have to exercise caution before dismissing any IRS notice, your best move will be to call the IRS directly at 1-800-829-1040, to confirm whether you actually owe. You will also be able to obtain all the payment methods available, along with a valid address to send your payment. Don't take any IRS notice at face value, but don't cast it aside without first verifying the details.

Replacement Returns

Some ambitious scammers try to file returns early – yours. Certain fraudsters capitalize on the fact that taxpayers often don't get around to preparing their taxes until late in the season. If you're included in this group, you may find that your return has already been filed. How is this possible?

Unscrupulous but resourceful scammers gather key personal information in advance – such as your name, address and Social Security number – and file a return early in the year. The IRS often issues refunds automatically, only detecting discrepancies much later in the year. In the interim, if you attempt to send in your actual return, you'll receive notice that you've already filed. Correcting such an issue can take as long six months and can bring your future returns under closer scrutiny.

The best thing you can do in the spirit of preparedness is to handle your tax responsibilities in a timely fashion and don't disregard any outstanding liabilities. Scammers prey on some individuals who don't actually owe the IRS, but they also target people who have unpaid debts. If you're attempting to resolve a tax issue, consider consulting with a tax resolution company to ensure it's handled completely. And be ready for anything.

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