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Top 5 Tax Refund Scams Targeting Consumers in 2023

Mar 20, 2023

Thousands of consumers within the United States have lost both their personal information and millions of dollars to tax refund scams throughout the years. This year – 2023 – is no different. Scammers are immensely creative. They utilize many routes – regular mail, calls, and emails – in order to set their crimes in motion with consumers, businesses, and even professionals in the payroll and tax industries. It is imperative that you become aware of the top tax refund scams occurring now to protect your personal information and your finances.

IMPORTANT: You should know that the Internal Revenue Service (IRS) will never initiate contact with any taxpayer by text message, social media, or email to make a request for personal information or for financial information.

fraud prevention

Scams:

1. Fraudulent Tax Return Filed

Tax identity theft is a common issue. In the year of 2022 – alone – there were nearly 8 million reports of suspicious activity that were tax-related. Tax identity occurs when someone makes a tax filing using your name.

All this scammer needs is your full name, your date of birth, and your Social Security number.

The return will be created in such a way that a large refund will be issued. Once issued, the scammer will deposit. Then, you go to file your taxes. At that time, the IRS will alert you to the fact that you have already filed.

You can avoid fraudulent tax returns filed in your name by creating a designated Identity Protection PIN.

This helps to ensure that your return is secure. Each year, when you file your return, you will be required to set up a six-digit passcode. This passcode will serve as a type of “password”. That way, any imposter that attempt to is unable to file a return in your name.

Simply go to the IRS IP PIN page on their website to set this up so that you can be immediately protected.

2. “Ghost” Tax Preparation

In this scam, the individual conducting the scam will act as if they are filing your taxes. They will often use inappropriate exceptions, make mistakes, and may even file their own fraudulent tax return in your name, ensuring that the refund is deposited into their account.

If you do not file your taxes on your own, you should utilize a professional tax preparer that has a verifiable IRS Preparer Tax Identification Number (PTIN). You may verify this by requesting it and conducting a search for them in the Directory of the IRS.

3. Overdue Stimulus or Unemployment Benefits

This tax return scam started during the pandemic of COVID-19. In short, you will receive a notice of some type that claims that you have additional stimulus payments or even uncashed unemployment benefits. A link will be included that allows you to verify your personal information. It may even request that a fee be paid. The information and/or fee that you pay will then be submitted to the scammer.

If you want to see the status of any benefits that you may have pending, you should inquire on the account that you have with the IRS.

4. Cryptocurrency or Gift Card Payment Request

An individual will usually use a phone call to commit this scam. When they call, they will say that you have penalties, tax obligations, or fees that you owe. They will claim to be the IRS and will threaten you. Then, they will say that you may pay in cryptocurrency – such as Bitcoin – or in gift cards – such as Amazon.

The IRS does NOT accept these forms of payments. If you receive any of these calls, hang up. This is a scam that could detrimentally impact your finances and possibly even put your personal information and investments at risk.

5. Offer in Compromise (OIC)

The program, Offer in Compromise, is a legitimate one that is offered to taxpayers that are having difficulties paying their tax-related debt. Taxpayers are required to meet specific criteria in order to qualify for the program.

Unfortunately, scammers are aware of this. As a result, they will contact you, claiming that they are able to offer assistance to help you apply – even if you do not meet the qualifications. Then, they will require a fee for their services. To avoid this, visit the pre-qualifying tool offered by the IRS.

Magnifying Glass

Steps to Identify an IRS Imposter

To protect yourself from tax refund scams, you must learn how to identify a scammer who attempts to pose as an IRS representative. First, you should know that nearly all of the correspondence from the IRS will be delivered through the mail.

If you fail to respond, yes, another form of contact may be initiated. In most instances, a call will be made. In other instances, an agent may visit in person. If this happens, they will have a government-issued badge that is identified as a “HSPD-12”.

The following outlines the warning signs that you are dealing with a scammer:

  1. The individual attempts to contact you through text messaging, email, or social media.
  2. The phone message that you receive is recorded. If the IRS does call, it will always be a person on the other end, not a pre-recorded message.
  3. They inform you that you will need to pay through a means that is unofficial. The IRS always payments at their website, IRS.gov.
  4. The individual states that payments may be made with cryptocurrency, gift cards, a wire transfer.
  5. They will tell you that the check you write must be made to the “IRS”; however, the REAL IRS has checks made out to the “U.S Treasury”. They do this because they can transition what you wrote to the word “MRS”.
  6. They want information about your bank, your credit cards, and other aspects of your finances. Do not give out bank numbers, account numbers, or any login information.
  7. They may threaten to revoke your Driver’s License.
  8. They may claim that you may be arrested and deported.
  9. They say that they are able to perform a service for you, but you must pay upfront.
  10. They claim you have surplus funds from another account and you will need to pay a fee to release those funds.

You are a Victim of a Scam

If you have discovered that you are a victim of a tax refund scam, you should do the following:

  1. If a tax refund has been filed fraudulently, print out an affidavit for Identity Theft and then mail your tax return.
  2. If you are told you owe the IRS taxes, check out their IRS Payments page on their website to verify – one way or another.
  3. If you have sent money to the scammer, make an attempt to cancel it. If you provided bank account or credit card information, call the fraud department and request a freeze to be placed on that card.
  4. You may file a report with the FTC at the IdentityTheft.gov website as well as the Treasury Inspector General for Tax Administration (TIGTA) if you find that you are a victim of identity theft.
  5. Take all steps necessary to protect your identity and finances in the future.

Contact Us

If you are in need of financial assistance, want to open a bank account, take out a loan, or discover more ways to protect your money and identity, contact us here at Somerville Bank by visiting one of our many locations. We have financial agents standing by to assist you. You may view our locations by clicking the following link: https://somervillebank.net/locations/