Tax season has officially finished!
October 15th marked the individual tax return extension deadline. As the IRS is now processing all of the tax returns on extension, there are some who will owe, some who will break even and some who will get money back. Nothing to worry about until next tax filing season, right?
It is important to consistently stay vigilant when it comes to any communications coming from someone representing themselves as an IRS agent. There are plenty of scammers out there who know that there are many people who utilize the tax extension period to file their tax returns. Scammers use various methods to try and take advantage of would be victims by posing as an IRS agent.
Three of the most common types of scams are as follows:
(1) Phishing - Akin to its play on word "fishing", scammers are doing just that. They cast out an email, acting as an IRS agent, to an intended recipient promising a larger than anticipated tax refund or threatening the recipient with legal action if their request is not complied with. Yikes! As enticing or as scary as this email can be, their goal is to play on your emotion to get you to make an illogical decision immediately. The sender typically would include a link for "convenience" that would direct you to some 3rd party website that you would enter personal information such as your social security number or credit card.
(2) Phone Scams - This one is a classic. This happens to more people than you think (heck, I get these too!). The intended victim gets an unsolicited phone call claiming to be a representative from the IRS trying to intimidate a taxpayer into giving personal information over the phone. The goal? to get you to pay a fake tax bill. This is intended to scare the victim into giving a credit card or bank information that the criminal could then use to steal money.
(3) Identity Theft - Nothing new here but criminals have evolved their methods as electronic filings have become the main method many individuals file their tax returns. Identity Thieves use a stolen social security card to file a fraudulent tax return and claim a refund. The victim then tries to file an authentic tax return and the tax return gets rejected. Over $9.5 Billion were lost due to tax fraud in 2018 alone. As thieves get more sophisticated, this amount could be greater come this next tax filing season.
As obvious as these scams are, they are still prevalent in our society. My advice is to know how the IRS will contact you. Initial contact from the IRS, will always be via mailed letter. The letter will state what the issue is and provide you with a phone number to call. They will never ask you for your personal information via email nor will they call you directly. Once you call into the IRS phone number provided on their letter (and it does take some time to be put into an IRS representative), then they will verify who you are.
If you are uncertain as to what to do when you receive a letter from the IRS, the best thing is to speak to your accountant immediately. Your accountant will have the knowledge and understanding to speak directly to the IRS and help resolve the outstanding situation.