5 Tax Scams You Should Know About
A tax scam is an illegal trick employed by some criminals to rob money from taxpayers or to steal their personal information or tax refunds. Scammers usually target vulnerable people, such as the elderly or first-time tax filers, but everybody is at the risk of being a victim of this crime.
Identity theft
We usually think that all we need to do is replace and cancel our credit cards in case of credit card theft.
Impostor phone calls
Common tax scams include aggressive phone calls from unknown persons. You’ll receive a call—sometimes from an unknown number—and the person on the line will claim to be an income tax department representative. They will claim to know your full name, your mother’s maiden name, and even the last few digits of your number on any of your personal identity document. The person will threaten you saying that you’re running late on your tax returns or have filed a fraudulent return. They may also threaten you with an arrest. They’ll say the only way to avoid this situation is by completing a quick credit card payment over the phone.
You Might Also Like : 22 Most Overlooked Tax Deductions
Gift card payment requests
There have been cases of people receiving calls from IRS officials who claim that the notification letter for your tax returns was returned as undelivered. They issue verbal warnings that tax bills are overdue and a payment must be immediately done. But they won’t ask for credit card or any personal information, rather they’ll ask you to immediately send them a prepaid gift card or any kind of voucher or debit card information. It is important to know that the IRS department does not accept such modes of payment
Information swindle
You may get emails or calls from tax preparation software companies or officials claiming to be from IRS. They will claim that there is an issue with tax returns or refund. To resolve this, a verification of information is required. Under this pretext, these scammers try to obtain personal information such as SSN number, date of birth, and work location. Then, they use this information to file a fraudulent tax return to steal the tax refunds.
Tax preparer fraud
Fraudulent tax preparation professionals often advertise their ability to get you the biggest possible refund. They do this by using fake information of your return. This may include declaring non-existing dependents, claiming credits or deductions you don’t qualify for, and reporting wrong income. They’ll also typically charge their commission rates off a percentage of your refund. The IRS encourages you to clarify and look into the smallest detail and also to look into the certifications and credentials of tax preparation professionals before handing over your returns to them. All legal tax preparers must have a PTIN (preparer tax identification number). It is very important to do background checks of your tax professional and also to closely look over at any forms before signing.
Keep yourself updated with the latest on Taxes . Like us on Facebook and follow us on Twitter for more on Investments.