In recent years, criminals have become increasingly sophisticated at using income taxes as the backdrop for a variety of scams. The scams come in many forms, including e-mail phishing, identity theft, fraudulent refund claims, and others. A good scammer can be very convincing and intimidating. We present here some indicators of tax scams and some resources should you believe you are the victim of a tax scam.
Tax scams come in many forms, including e-mail, mail, fax, and phone. We are not aware at this time of any widespread tax scams conducted in person (i.e. face to face), but it is certainly a possibility. Scammers usually claim to represent the IRS, but occasionally use a state tax agency such as Oregon Department of Revenue (ODR). The most common forms of tax scams are these:
- Claim you are due a refund - The scammer informs you that you are due a refund and must provide proof of identity (Social Security Number, etc) or bank information in order to receive the funds.
- Claim you owe taxes - These scams typically indicate you owe a specific balance and must pay it immediately or face severe consequences. They are usually very threatening and often claim that failure to pay may result in criminal charges, loss of your driver's license, deportation, etc.
- Claim there is a problem with your account - Similar to banking scams, these schemes aim to trick you into providing identification and/or banking information in order to resolve an unspecified "problem" with your account.
- Fraudulent tax returns - Armed with your legal name and Social Security Number, it is possible for scammers to file a fraudulent tax return claiming large refunds. You are generally unaware this has happened until you attempt to e-file your actual tax return and are informed a return has already been received in your name and ID#.
As sophisticated as scammers can be, there are usually some indications of a fraudulent tax claim. Here are some of the best ones:
- Contact via e-mail - Tax authorities do not initiate taxpayer contact through e-mail. Any e-mail making any of the claims listed earlier is a scam.
- Initial contact by phone or fax - The IRS in particular will always make initial contact by mail. Only if that fails will they resort to calling a taxpayer.
- Demanding immediate payment - If a caller claims you owe taxes and demands you pay immediately (that is, before hanging up the phone), hang up; it's a scam.
- Insisting on a particular payment format - No legitimate demand for tax payment will insist on any particular payment format (debit card, money order, etc.).
- Threats - The IRS has certain powers it can use in the collection of income taxes. Short of civil or criminal prosecution, these powers generally include freezing your bank accounts, garnishing your wages, and/or placing a lien against your properties. Threats of a more immediate nature (jail, driver license suspension, etc.) are clear indicators of fraud. The IRS will never involve local law enforcement officers, exert control over other government agencies, insist or suggest you hire an attorney, threaten jail time (unless you are being prosecuted, of course, but you would know if that were the case!), or otherwise threaten you with any consequences that are not financial in nature.
- Last 4 of your SSN as proof - The IRS knows your Social Security Number. All nine digits. Under NO circumstances will they tell you any of those digits. If a caller attempts to "prove" they are legitimate by reciting part of your SSN (usually last 4 digits), hang up.
If you are, or believe you are, the victim of a tax-related scam there are a number of resources at your disposal. First and foremost is the actual agency (IRS, ODR, etc.) being spoofed. Both the federal and state governments are well aware of the existence of these scams and have systems in place to protect you.
Federal - Internal Revenue Service
- To verify a claim of balance (or refund) due, you can check the status of your account on the IRS website at www.irs.gov under the "Get Transcript Online" section. If you haven't already done so, you will need to establish an account first, but this is a relatively straightforward process.
- Alternatively you may call them at 1-800-829-1040.
- You may report phone scams to the Treasury Inspector General at 1-800-366-4484 and are encouraged to forward e-mail scams to firstname.lastname@example.org.
- Victims of identity theft or fraudulently filed tax returns should contact the IRS to receive a PIN to be included with all future tax returns; any return e-filed without that PIN will be automatically rejected.
- Extensive information can be found on the IRS website at http://www.irs.gov/Individuals/Identity-Protection-Tips
- Identity theft victims should also contact the three major credit bureaus promptly.
State - Oregon Department of Revenue