With the tax season returning, so are tax scams. Tax scammers prey on people who are either ill-informed or not informed at all. The Internal Revenue Service estimates that it prevented $22.5 billion in attempted identity-theft tax fraud, but paid out $3.1 billion in fake refunds in 2014, the most recent year available. The U.S. Treasury Inspector General for Tax Administration recently projected that victims collectively have paid more than $36.5 million to scammers posing as IRS officials since October 2013. The average amount lost is $5,700. ( Source : CNBC) Here are 3 of the more predominate tax scams out there.
Paying the Federal Student Tax
College Students make great targets for scammers. With little “real world” experience, tax scammers push this fictitious tax with the threat of bringing in law enforcement. Besides the fact this tax does not exist, real IRS agents never threaten to immediately bring in local law enforcement to have you arrested for not paying your taxes.
“Verifying” Tax Return Information Over the Phone.
This scam does not target your money. It targets something just a valuable, your identity. They are looking for information like social security numbers and bank accounts to get a big payoff. The IRS will never call you to verify information over the phone, never.
Official-looking emails are designed to fool taxpayers into thinking they’re communicating with the IRS, tax preparers or tax software companies. Known as phishing, these emails and text messages are used by scammers to seek information that will help them file a false refund in your name. Generally, the IRS communicates first by mail. In knowing this, it’s best that if you get one of these emails, not click on any of the links.
What To Do If You Know of a Tax Scam
Tax Scams are not happening just because some of the general population are not informed, but also because the IRS is at its weakest workforce in years. The agency’s budget has been cut by 17 percent since 2010, after adjusting for inflation, according to the Center on Budget and Policy Priorities. The center estimates that 12,000 enforcement personnel have been let go during that period, a 23 percent reduction in staff that cracks down on scams. So what can you do if you run into a scam?