Protect Yourself from Tax Fraud During Tax Seasons

It can be challenging to distinguish between a tax scammer and the Internal Revenue Services (IRS), especially if this is your first encounter with a tax scammer. It is crucial to comprehend the IRS’s communication to identify any red flags. 

We know for a fact that millions of dollars are stolen by tax scammers in the United States using technology and other creative ways. Our goal with this page is to raise awareness and prevent taxpayers from falling victim to tax fraud. 

The season for filing taxes is also the season for tax scamming. Year after year, there are countless stories of taxpayers who have been swindled in the United States. Millions of dollars are being stolen by using different strategies and technologies ranging from old school to the most advanced form.

In 2018, the IRS found a drastic increase in fraudulent emails aiming to steal tax information and money. For this reason, the IRS issued various warnings on how to identify scams and strategies that can be used to stay out of the reach of scammers and get real IRS help.
Here are some popular hoaxes being used by scammers showing their mode of operation and how they can be avoided.

Many scammers try to take advantage of the confusion surrounding the “IRS fresh start initiative” which was developed in 2011. They often contact their victims with fake numbers or emails that appear to be from the IRS; informing them that they owe money to the IRS. The scammers persuade the victim to pay off their “debt” immediately over the phone and suggest the use of credit cards, bank transfers, and even gift cards to make payments. This is something the IRS would never do.

In the past, one of the major credit bureaus, Equifax, lost control of the information that belongs to their clients; including their social security numbers, addresses, credit card numbers, dates of births, and other sensitive details. Equifax estimated that the information of approximately 140 million people (mostly in the United States) was exposed to the public.

IRS vs Tax Scammers Communication Channels

The IRS will never call you via phone, only through mail. However, it is recommended to confirm the legitimacy of any notice received via mail by contacting the IRS through phone or chat on IRS.gov. If you need additional guidance, fill out the contact form and our tax advisers will help.  

Fresh Start Scams: People Posing as the IRS

Mode of Operation: One of the most common methods involves scam artists claiming to represent the IRS and demanding immediate tax payment. They call from a phone number that may appear to be from the IRS and then threaten, tease, and intimidate the taxpayer in order to pressure them to make hasty decisions about the IRS fresh start forgiveness program or the IRS tax relief program. Many times they request a transfer of funds through a gift card or electronic transfer. These thieves mostly make use of emails and social media platforms for their crimes.

How to avoid: It is important to know that the IRS never calls or shows up at your house to demand immediate payment, especially by credit card or bank transfer. In fact, the IRS offers an opportunity to appeal and offers different ways to resolve a tax debt. The “offer in compromise” is very effective. The first thing you should do is hang up the phone as the IRS would never call to make threats or demands. Also, if you have doubts about your account information, you can check the information online and check if you have a debt. You can also go to their official website and find a way to contact them.

The Surprise Refund

Mode of operation: After criminals obtain your personal information such as a Social Security number or tax documents, they can easily file a fraudulent statement in your name. Once the funds reach your bank account, criminals, posing as someone from the IRS or a collection agent, contact you to demand the money you received illegally, depositing it in an account or sending it to an address.
How to avoid: You should be alert if you receive a demand for payment, refund or message from the IRS, or from the person making the tax return, about various returns filed with your Social Security number. If they send you a refund in error, don’t spend it because the IRS will surely ask you to return it. If you suspect that you are a victim of a tax scam, file a complaint with the Federal Trade Commission. Request that major credit bureaus place a “fraud alert” on your record.

The Electronic Trojan Horse

Mode of operation: Thieves have had years to hone their email tricks and have recently expanded to text messaging. Phishing scams have become much more sophisticated, with messages that look incredibly authentic and trick victims into delivering sensitive information or installing malware. A particularly bold trick is the use of the IRS name and logo when requesting personal information. Criminals are also targeting tax professionals in addition to taxpayers.

How to avoid: You must be very careful with any communication you receive by email, text message or social media that says it is from the IRS, a tax professional or a financial organization. If you receive such a message, the IRS requests that you send it to phishing@irs.gov. Again, the IRS never initiates a contact to request personal or financial information. You should know that the IRS regularly updates its website with information about scams and how to respond if you have a problem.

False Donations

Mode of operation: According to information from the IRS, scammers create fraudulent charitable organizations to attract tax-deductible donations. This mode of scam is usually more common after natural disasters. They contact their victims by phone, email or even in person and present themselves as IRS workers in order to gain access to personal information.
How to avoid: Remember that you should never provide personal or financial information, such as your Social Security number. Likewise, before making any type of donation, check that it is a real organization. The IRS provides a searchable list for qualified organizations to make tax deductible donations.

Summary

The IRS never requires a specific method of payment, such as a debit card, gift cards, money orders, and will never ask for your credit or debit card information over the phone and via email. In addition, the IRS never threatens to send the local police, immigration officers, and other law enforcement officers. They do not make threats to arrest a taxpayer for not paying. They cannot revoke your driver’s license, business permits, or immigration permits. It is important to know your legal rights, as well as the right professionals to refer to for help. If you receive any notices with these types of threats, know that this is a scam; and if you are afraid that you may owe anything, seek out a professional agency like Global Gate for tax relief before you make any potentially costly mistakes. 

Here’s what the IRS will NEVER do:

• The IRS will NOT call you claiming to be the IRS.
• The IRS will NEVER request for personal or financial information over the phone, text or email. 
• The IRS will NOT demand payment without you having the opportunity to appeal the amount. 
• The IRS will NEVER threaten to arrest you over the phone if you refuse to pay owed taxes. 

It is important to understand that the IRS will send written notices via mail. 

How does the Fresh Start Program work?

The Fresh Start Program is offered by the IRS for taxpayers who are struggling or unable to pay tax debt. However there are some qualifications to meet in order to qualify for the Fresh Start Program. 

Here’s how the IRS Fresh Start Program works:

1. If the taxpayer owes a large tax debt, the IRS may agree to installments over a specified time period.
2. The IRS may agree to a repayment duration extension.
3. If the taxpayer can’t pay their taxes on time, the IRS will provide a penalty relief (e.g. Waiver of the failure-to-pay penalty, abatement of penalties, or first-time penalty abatement)
4. The IRS may agree to a program that offers the taxpayer flexible terms to settle any tax debts. (To be approved, the taxpayer must submit an offer to the IRS with a proposed payment and explaining their current financial situation.) 

What are the requirements to be approved for the Fresh Start Program?

The Internal Revenue Services created the following criterias taxpayers must meet for approval: 

• A taxpayer must have filed the required tax returns necessary (e.g. State & Federal tax returns) 
• A taxpayer must be up-to-date with tax filing (e.g. any estimated tax payments, employment taxes, etc.) 
• A taxpayer must have the ability to pay over time through installments or lump-sum payments. 
• The tax debt amount plays a critical role to determine the eligibility of the taxpayer.
• A taxpayer must comply with the tax law to be eligible for the program.

Frequently Asked Questions: