Tax Season Scams – 5 Common Tax Scams to Watch Out for in 2021

It’s only September, but tax season is just around the corner, which means scammers are chomping at the bit to get their hands on your money. 

While scams are everywhere these days, people are especially vulnerable during tax season as this is a confusing time for most anyway. To help you avoid falling prey to tax season scams, we’ve put together a list of some of the more common scams to be on the lookout for this coming tax season. 

1. Tax Refund Scams

Identity theft is a real problem for taxpayers these days. When this happens, a scammer steals your social security number and files an individual tax return in your name. The scammers who do this usually file electronically, claiming low income and high deductions to get a big refund. Then, when you file your taxes, the IRS rejects your return because someone has already filed using your information. 

To prevent this from happening, you can opt into a program that assigns you an Identity Protection PIN. The IP Pin is sent to you via the USPS each year before tax season, and it must be entered on your return for it to be valid. Just keep in mind that once you’ve opted in, you cannot opt-out of this program. 

2. W-2 Email Phishing Scams

This scam is a popular one where scammers pretend to be CEOs or other top brass asking for sensitive W-2 information from the employees of major companies. They email the HR or payroll department asking for the information and then file bogus tax returns with it or sell it to other criminals for a big profit. 

3. Ghost Tax Preparers

Another scam that’s been successful in the past is the ghost tax preparer. Anyone who does your taxes for you must sign your return and include their preparer’s ID number – it’s the law. If the signature is missing or they don’t provide the ID number, it could be a sign that they aren’t being honest in preparing your taxes. They could be looking to make a fast buck by promising huge returns and then charging large fees based upon the size of the refund. 

Other signs you might be dealing with a ghost tax preparer include asking for cash payment without providing a receipt, making up fake deductions to increase your refund, falsifying income information, and having clients deposit refunds into their own bank accounts. 

4. IRS Phone Scam

In this scam, someone calls you on the phone claiming to be an IRS agent. They inform you that you have a tax bill you must pay right away or risk being arrested. They tell you to wire the payment or pay with a prepaid debit card. The caller ID backs up their claim of being IRS because they use “spoofing” to make it appear so. Don’t be fooled. The IRS will never call you to demand payments over the phone. They deal solely through USPS mail. 

5. iTunes Gift Card Scam

In this IRS scam, someone again calls claiming to be an IRS agent threatening arrest if you don’t pay your tax bill right away. They tell you to put your payment on a gift card of some sort and then read them the 16-digit number on the card. This allows them to access the money on the card anonymously. 

Tax season is just around the corner, and scammers are sure to be out in full force. From supply chain attacks to identity theft, it’s important to educate yourself on the many scams that are out there so you can avoid becoming a victim.