04 Mar 2014

Tax Season is Here – Take Steps to Prevent Fraud

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Trustee Tip:

Protect Yourself  and Your Clients This Season

Tax season is now in full swing. What you probably didn’t know was the spike in tax scams common to taxpayers each year. These scams can occur anytime during the year, but peak during filing season. Identity theft, telephone scams, phishing and tax preparer scams are the most widespread. The IRS releases its annual “Dirty Dozen” list each year highlighting the top twelve common scams encountered by taxpayers. Below we summarized five of the most common types of scams in order to help you prevent yourself, and your clients, from fraudulent attacks.

Identity Theft

Tax fraud, through the use of identity theft, is atop the IRS Dirty Dozen list. Identity theft happens when someone uses your personal information for fraudulent purposes. In the case of tax fraud, the thief will file a counterfeit tax return in order to claim a refund.

The IRS has a special Identity Protection section on their website dedicated to helping you prevent identity theft. They also have a dedicated division called the IRS Identity Protection Specialized Unit, for victims of identity fraud. You can contact them directly at 800-908-4490.

If you feel you have become a victim of identity theft, contact the IRS immediately. They will take special action to secure your accounts.

Telephone Scams

The IRS has seen a recent increase in phone scams with callers pretending to be from the IRS in hopes of stealing your identity and your money. Scammers inform victims that they owe the IRS money or that the IRS owes them large refunds. Callers will threaten arrest, driver license suspension or worse. Often, victims are told to pay money through a pre-loaded debit card or through a wire transfer.

If you find yourself the victim of a phone scam, call the IRS directly at 800-829-1040. IRS employees will be able to verify if there is a payment issue and will work with you on a resolution.


These scams typically include unsolicited mail, emails and fake websites directing you to provide thieves with personal and financial information. If you receive unsolicited emails from the IRS, or anyone claiming to be affiliated with them, report it to the IRS immediately by emailing the complaint directly to phishing@irs.gov.

It is important to remember that the IRS does NOT initiate contact with taxpayers by email, including text messages and social media channels.

False Promises of Free Money from Inflated Funds

Scam artists will pose as legitimate tax preparers attracting victims with the promises of large tax refunds. They build false hope by preying on those who do not have filing requirements. Take extra precautions when choosing an individual or firm to prepare your taxes. Reputable preparers will normally ask for proof of income, eligibility for credits and deductions, sign returns as the preparer, use their IRS Preparer Tax Identification Number (PTIN) and provide you with a copy of the return.

Be cautions if you are working with a tax professional who is unwilling to provide you with this information.

Return Preparer Fraud

When hiring a professional to prepare your taxes the IRS reminds you to only use preparers who sign the returns they prepare and enter in their PTIN number. Remember, as a taxpayer you are legally responsible for what is on your tax return – even if it is prepared by someone else.

Tax scams can take on many forms. Taxpayers should be aware that such scams exist and should be prepared by staying on the lookout. We only mentioned a few of the fraudulent scams listed on the IRS “Dirty Dozen” list. Click here to see the full IRS list and to learn more about tax fraud.

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