Tax Scams Hit More Than One-Third of Americans

IRS warns against phone, email and tax preparer fraud
A woman on the phone

While many Americans are hustling to get their taxes prepared and sent to the Internal Revenue Service, a new survey suggests that scammers may be busy as well.

More than one-third of taxpayers — 38% — say they’ve experienced a tax-related scam, according to a survey conducted by YouGov and electronic payment provider ACI Worldwide.

Phone fraud schemes appeared to be the most common, with 27% of respondents having received a phone call from an alleged tax scammer. Another 17% reported being targeted by an email scam.

Tax scams are not just a nuisance. They’ve cost taxpayers millions of dollars, according to the IRS.

Phone scams typically entail a con artist pretending to be from the IRS and demanding money, sometimes even threatening to throw the victim in jail. Some email schemes, meanwhile feature letters claiming to be from the IRS. When the recipient opens an attachment, malware is downloaded onto their computer.

Many taxpayers are also at risk from what the IRS calls “ghost preparers” — self-described tax professionals who prepare your taxes but don’t sign your tax return or include a valid 2019 Preparer Tax Identification Number (PTIN), which paid preparers are legally required to do.

Ghost preparers have been known to hurt consumers in a number of ways, according to the IRS. For example, they may charge fees based on a taxpayer’s refund and then claim fake deductions on the taxpayer’s return in order to boost the refund amount.

Ghost preparers have also been known to have the refund sent to their own bank account rather than that of the taxpayer, the IRS said. Since they leave no trail — failing to sign the return and not providing a PTIN — they can be difficult to track down after the fact.

Although the IRS warns consumers to make sure their tax preparer uses a PTIN and signs the return, nearly half (46%) of taxpayers who use a preparer don’t check for this, the ACI Worldwide survey found. Younger Americans are more likely to make this mistake, with 56% of millennials failing to check their preparer’s credentials, compared to 48% of Gen Xers and 32% of baby boomers.

While law enforcement is working hard to catch tax-time fraudsters, it’s important to stay vigilant and take precautions to avoid becoming a victim. Know that the IRS will never instigate a call demanding money, nor will it ask for credit or debit card numbers over the phone or threaten to call law enforcement.The IRS also doesn’t send unsolicited emails to consumers, so if you get an email message purporting to be from the IRS, delete it and call the real IRS instead.

If you use a tax preparer, make sure they’re legit — you can check this IRS directory if you need to find one. And regardless of whether you get help or prepare your tax return yourself, be suspicious of any tax communication claiming to be from government.

Tamara E. Holmes

Tamara E. Holmes is a Washington, DC-based writer who covers personal finance, entrepreneurship and careers.

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