In Pursuit of Profit
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Scammers pretending to be from the IRS continue to target taxpayers this year. These scams take many different forms. Among the most common are phone calls and fake emails. Thieves use the IRS name, logo or a fake website to try and steal money from taxpayers. Identity theft can also happen with such scams.
Taxpayers need to be cautious of phone calls or automated messages from scammers who claim to be from the IRS. These criminals often say the taxpayer owes money. They also demand immediate payment. Scammers also lie to taxpayers and say they are due a refund. They do this to lure their victims into giving their bank account information over the phone. The IRS warns taxpayers not to fall for these scams.
Scams Are Also Targeting Tax Professionals
Increasingly, tax professionals are being targeted by identity thieves. These sophisticated criminals are looking for real client data to better impersonate the taxpayer when filing fraudulent returns for refunds. A new phishing email purporting to be from a tax software education provider is unusual for the amount of sensitive preparer data that it seeks. This information enables the thieves to steal client data and file fraudulent tax returns.
The IRS reminds all tax professionals that legitimate businesses and organizations never ask for usernames, passwords or sensitive data via email. Nor should a preparer ever provide such sensitive information via email if asked.
Recent scams targeting the tax professional community include:
Tax professionals should review Publication 4557, Safeguarding Taxpayer Data, A Guide for Your Business, which provides a checklist to help safeguard taxpayer information and enhance office security.
Be sure to check with your tax professional about their process for safeguarding taxpayer data.
Below are tips that will help your business avoid becoming a victim during the summer months and throughout the year.
The IRS will NOT:
If a taxpayer does not owe any tax, they should:
If a taxpayer is not sure whether they owe any tax, they can view their tax account information on IRS.gov to find out.
Taxpayers should also watch out for emails and websites looking to steal personal information. An IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. Criminals often use fake refunds, phony tax bills or threats of an audit. Some emails link to fake websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they’re successful, they use it to steal a victim’s money and their identity.
For taxpayers who get a ‘phishing’ email, the IRS offers this advice:
Here is a recap of this year's "Dirty Dozen" scams:
Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information. (IR-2017-15)
2) Phone Scams:
Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. (IR-2017-19)
3) Identity Theft:
Taxpayers need to watch out for identity theft especially around tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security number. Though the agency is making progress on this front, taxpayers still need to be extremely cautious and do everything they can to avoid being victimized. (IR-2017-22)
4) Return Preparer Fraud:
Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest high-quality service. There are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. (IR-2017-23)
5) Fake Charities:
Be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. (IR-2017-25)
6) Inflated Refund Claims:
Taxpayers should be on the lookout for anyone promising inflated refunds. Be wary of anyone who asks taxpayers to sign a blank return, promises a big refund before looking at their records or charges fees based on a percentage of the refund. Fraudsters use flyers, advertisements, phony storefronts and word of mouth via community groups where trust is high to find victims. (IR-2017-26)
7) Excessive Claims for Business Credits:
Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities and/or satisfy the requirements related to qualified research expenses. (IR-2017-27)
8) Falsely Padding Deductions on Returns:
Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions such as charitable contributions and business expenses or improperly claiming credits such as the Earned Income Tax Credit or Child Tax Credit. (IR-2017-28)
9) Falsifying Income to Claim Credits:
Don’t invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers are sometimes talked into doing this by con artists. Taxpayers should file the most accurate return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties. In some cases, they may even face criminal prosecution. (IR-2017-29)
10) Abusive Tax Shelters:
Don’t use abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2017-31)
11) Frivolous Tax Arguments:
Don’t use frivolous tax arguments to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims even though they have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000. (IR-2017-33)
12) Offshore Tax Avoidance:
The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore. Taxpayers are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities. The IRS offers the Offshore Voluntary Disclosure Program to enable people to catch up on their filing and tax obligations. (IR-2017-35)
Too smart to fall for a scam?
The emails might not talk about money you owe. Instead, they will promise a refund. Or, ironically, they may pose as an anti-fraud email.
One example of a fake email posted on the IRS website reads: “The Internal Revenue Service Antifraud Commission has found three fraud attempts regarding your bank account … unblock your funds by accessing the link provided here.”
There are more scammers than ever before and they are getting more sophisticated. Do not forget, if you have received or fallen victim to the scam email, forward a copy to email@example.com.
We can help keep you confident about your record keeping. Contact Eric Moore, ASP Practice Leader. Eric’s contact information is here.