As the tax filing season approaches, along with taxpayers, fraudsters also become hyper-active. Being informed of tax scams is very important for taxpayers in order to protect their assets and avoid financial and taxation problems since information like Social Security Number, Tax Identification Number, and Electronic Filing Identification Numbers (EFINs) are highly confidential, and once leaked it can be very difficult to maintain and provide the same level of security with respect to tax and personal information.
Although the U.S. Internal Revenue Service (IRS) tries its best to provide enhanced security while e-filing and protecting taxpayers’ information, it is the duty of every taxpayer to keep themselves informed about possible tax scam methods and how to protect themselves from criminals and thieves.
As tax preparers, we believe it is our responsibility to keep our clients and other taxpayers informed about the various measures to exercise when it comes to protecting their tax information, therefore in this article AG Tax analysts have summarized some of the common tax fraud methods and how to recognize and avoid them.
Types of Tax Scams
Phishing
In this case, the taxpayer usually receives an e-mail pretending to be from the IRS in which a link will be provided of a website, asking the taxpayer to update their tax-related information, such as: login in ID, password, etc. once the taxpayer inputs these details, the information is easily available to the scam artist. Often these website will look professional and authentic like the IRS website making it easy for unaware taxpayers to fall for such scams. The website address would vary slightly. For example, instead of www.irs.gov, it could be www.irsgov.com but for a layman or a busy person it may be difficult to notice such minute differences. To stay safe, taxpayers should avoid clicking on links mentioned in such e-mails since the initial form of IRS communication is always by mail through the U.S. postal service, so make sure your mailing address is up to date with the IRS.
Impersonation of IRS Agent by Phone
Generally in such situations, the imposter is aware of certain details of the target taxpayer, making it easy for taxpayers to fall prey to these impersonators. The impersonator, often, cites fake badge numbers and create fake background noises, similar to that of a customer service center, and then inform the victim of their tax liability which requires immediate payment either by online debit or credit card transaction, and non-compliance could have severe consequences, such as: imprisonment, suspension of a business or driver’s license or other forms of punishment. Often, these scammers may lure a taxpayer into divulging financial account details by stating that the taxpayer is eligible for a refund, and they need the account information to make the deposit.
In such cases, taxpayers should be informed that the IRS will never ask for immediate payments of any tax due, or ask account details, etc. through e-mail and/or phone calls. As per the IRS protocols, In case of adjustments or errors, firstly a notice would be sent to the taxpayer, against which the taxpayer can file an appeal, and in case the notice is valid, the taxpayer is also allowed to consider various forms of payments suitable to them but never an immediate payment. It is highly recommended that taxpayers should immediately disconnect the call if the person states that it is from the IRS, or any other IRS or government-related authority and the person needs to make an immediate payment. It is likely that there may be a follow-up call by another participant in the scam but as mentioned above the IRS never makes initial contact by telephone or e-mails.
That being said, if a taxpayer comes across such e-mails, or receives phone calls feigning to be from the IRS, as a good citizen, a taxpayer should forward such e-mails to the IRS at phishing@irs.gov, or call the IRS helpline number 1-800-829-1040 or if outside the U.S., 267-941-1000 (long distance charges may apply). Always remember these points:
- The IRS never makes initial contact by e-mail or phone calls requesting personal or financial information.
- If it sounds too good to be true, it probably is.
- In case of doubt reach out to the IRS or your tax return preparer before clicking on a link or divulging details over a phone call.
AG TAX LLP CAN HELP
If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of US and Canadian tax laws as well as cross-border compliance.
Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- US Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
