For the last few weeks, I’ve been sharing a lot of financial “stuff” based on how so many people find themselves in hot water when it comes to money and spending. This week, though, as tax season is definitely heating up, I wanted to get back to some basics when it comes to everybody’s favorite problem – tax fraud.
Just like clockwork, my team and I have been getting all sorts of notices from the IRS about the latest schemes to take advantage of taxpayers and while some of 2020’s scams are simply modernized versions of traditional cons, there are some alarming twists.
- “The Bureau of Tax Enforcement” In this one, an official-looking letter arrives, claiming to be from the “Bureau of Tax Enforcement.” In some cases, it’s mentioned the IRS, but in most, it simply states this bogus bureau is the collection arm of the IRS and is designating where taxpayers can call to pay over the phone or where they can send payment for purported shortages owed to the United States Treasury. Obviously, it’s a fraud, but the impressive-looking delivery and legitimate-sounding verbiage of the letter has duped many people thus far.
- IRS Impersonators This is a very old scam with a modern twist. An email or phone call, claiming to be from the IRS is received with incredibly detailed instructions regarding a taxpayers’ refund. In the message, the taxpayers is directed to visit a certain website to view their refund progress and, you guessed it, that site gathers the taxpayer’s information and sets up a situation where their identity is stolen.
- Ghost Tax Preparers This is an old one, too, but until recently, was only a problem for a small percentage of taxpayers. It works like this: a taxpayer pays someone to prepare and file their return and that preparer (generally) makes certain guarantees regarding the size of the return. In exchange for a “maximum” return, the taxpayer will pay a premium – up to $1,000 – for the service, but the actual person who prepared the tax return will never sign the return (as they legally must do). The results? The taxpayer is “on the hook” for monies owed, is often audited, and the tax preparer? They effectively defrauded both the taxpayer and the government.
There are tons of different ways these and countless other scams are carried out, but the basic way to fight ALL of them? Simple – have a professional prepare your taxes. Make sure they have a “real” office, not some sketchy set up that opens in January in an empty strip mall and is closed on April 16th.