The deadline to file 2021 taxes is April 18. According to Internal Revenue Service, millions of Americans are waiting the last two weeks before the deadline to prepare their tax returns. Last-minute filers are at increased risk of scammers fraudulently filing a return on their behalf. Other less common tax regimes also seek to exploit federal reporting requirements. To avoid unnecessary hardship, Moody’s has offered tips to help taxpayers spot and avoid tax scams.
“The deadline for filing federal tax returns is only a month away and millions of Americans have not prepared their taxes. Although there is still time, filing early reduces the likelihood that a scammer steals your tax return. For more information on how to avoid common tax return scams, see the tips in our latest consumer alert,” she said.
Here are some of the most common types of tax scams:
Tax-related identity theft occurs when a target’s personal information is stolen so that a scammer can file a tax return claiming a fraudulent refund.
The tax gift card scam occurs when scammers forge fraudulent tax invoices to deliver to targets, convincing the target to pay the fees with gift cards.
Examples of refund recalculation scams are when scammers send phishing emails to targets, making the email look like a tax refund payment or tax refund recalculation , attaching a link to enter personal information to request the refund.
In June and July 2021, the IRS received a record number of reports of stimulus payment scams. The scammers impersonate the IRS and tell the targets that the target is eligible for a stimulus payment, claiming that personal information is needed for the payment to be sent.
Scammers can pretend to be an independent organization within the IRS called Taxpayer Advocate Services, and spoof caller ID to trick targets into thinking a legitimate TAS call is being received. Once the call is received or returned, the scammers will phish for personal information.
Tax scams can be complex, as scammers regularly adapt and update schemes. Below are tips for avoiding tax schemes:
When looking for a new tax preparer, look for one that is available year-round;
Ask a potential tax preparer to show an IRS preparer tax ID number – all legitimate
preparers can provide one;
Make sure that refunds will be sent to the taxpayer and not to a tax preparer;
Be aware that a letter from the IRS regarding an unfiled tax return is a scam;
Recognize that any notices from the IRS regarding the creation, access or deactivation of online accounts when no action has been taken are often scams; and
Pay attention to any salary or other income received from an unknown employer, as this could be a sign of identity theft.