The Internal Revenue Service (IRS) publishes a list of tax scams annually. The list helps to educate taxpayers on common tax fraud practices to help taxpayers identify and report scams.
While some scams have become routine in preying on unsuspecting taxpayers—such as fraudulent calls from parties claiming to be from the IRS, advertisements for “free money” from con artists posing as tax preparers, and tax preparers who encourage the taxpayer to sign a blank return—modern times and technology have provided more opportunities for scammers to swindle innocent people.
Over the past decade text message tax scams, email phishing campaigns, and fake tax websites have taken advantage of unsuspecting taxpayers. Going forward, technology continues to offer more freedoms and flexibility for tax filing, but at the same time poses more risks for becoming victimized by a tax scam.
- W-2 tax scam. On some corners of the web, credit card information, online banking credentials, and other confidential details are bought and sold by identity theft scammers. Digital Trends recently reported that some 2016 W-2 tax forms have been added to fraudulent marketplaces. Scammers can purchase these records to file false tax returns and collect tax refunds before the true taxpayer files their valid return. These W-2s can be obtained a few different ways. Con artists contact human resources or accounting departments of companies and request the documents, or hackers tap in and collect them. Educate colleagues and personnel on these scams to prevent sensitive data from being released.
- Email hacking threats. Every institution faces an ongoing threat of suffering a hack. Over the past year, Yahoo! has experienced three hacks, one of which was cited by Wired as the biggest hack ever reported. Taxpayers can only manage certain variables on their own: Choosing a secured email provider, using encrypted WiFi, and regularly changing and using secure passwords and passphrases.
- Tax preparer cyberattacks. Tax preparers are also victims of hacking. Hackers can remotely access tax preparers’ computers to file fraudulent returns. Practitioners should run regular computer scans and maintain service agreements with credible online security software providers. The IRS also provides instructions for tax preparers on how to check if their accounts are being tampered with.
Remember, the IRS will never send police to a taxpayer’s home, request banking information over the phone, or demand immediate payment over the phone. The IRS will mail hard copy letters to document tax debts and payment options.
Since new scams surface every year, take time to share potential threats with friends, colleagues, and family. Subscribe to our tax law blog for updates as they happen.