Tax season is here, and it tends to put most people on edge. Many are anxious to file their returns because they rely on the money from their tax refund. Others find it stressful to locate all their tax documents and file on time. Add in people’s fear of the IRS and making mistakes on their returns, and it creates the perfect environment for scammers.

Fraudsters feed off uncertainty, and tax time provides multiple opportunities to deceive taxpayers. Fortunately, protecting yourself can be easy with the right knowledge.

While the tactics used by fraudsters are constantly evolving, their scams tend to fall into three general categories. Familiarize yourself with each to avoid falling victim this year.

#1. Phishing Expeditions

Exactly as it sounds, scammers are fishing for any personal information you’re willing to provide. These communications come in many fashions, including emails, texts, and social media messages.

The messages range in topics like notices or threats from the IRS, links to file your taxes for free, or information on how to download tax forms (usually from financial institutions).

Staying Safe:

• Communications: The IRS sends all communications to taxpayers through the mail. They will never email, text, or contact you via social media. They will only call if you have an ongoing audit or dispute. 

• Virus Protection: Installing and updating virus and malware protection on all your devices is an excellent way to avoid accidentally downloading malicious files.

• Verify URLs: Always check the web address before clicking a link. Even if you recognize the company, ensure the link begins with https:// (the S means secure), or there is a lock icon in the address bar on your browser.

#2. Unrealistic Refunds

Fraudsters know that many people rely on the money from their tax refunds. That’s why popular scams tend to focus on maximizing your refund amount. These messages often promote special tax loopholes and new COVID-19 stimulus payments.

A new trend emerging on social media involves direct messages (often from hacked friends’ accounts) recommending a CPA or tax service they used to get a much higher tax refund.

Staying Safe:

• Be Cautious: Be wary of any emails, texts, or social media messages that reference anything regarding taxes. Always verify links, and if it sounds “too good to be true,” it’s probably a scam. 

• Reputable Tax Preparer: Refrain from using tax preparers you’ve never heard of before. Sticking with reputable companies, either online or in person, is best. They’ll also be available to help if you have any issues after you file.

#3. Impersonation Attempts

Receiving a phone call from an IRS agent threatening to put you in jail for tax evasion is enough to force countless taxpayers to fall victim each year. These callers can be very aggressive and typically demand owed tax payments to avoid jail time.

While the intimidating IRS agent is common, a new, more subtle take on this scam is emerging. It usually involves your financial institution calling to verify your personal information so they can correct an error on your tax forms.

Staying Safe:

• Communications: Again, the IRS will never call you out of the blue. You will only receive a phone call from the IRS if you have an ongoing audit or dispute. So, if you receive a call from the “IRS,” just hang up.

Likewise, your financial institution won’t call you unsolicited to verify personal information. If you receive a call like this, hang up. Then, contact your financial institution directly to confirm whether it was them.

• Payments: The IRS does not accept payments in the form of gift cards, prepaid debit cards, wire transfers, or cryptocurrency. Any communication demanding payments in these forms is likely a scam.

• Criminal Activity: While it’s true you can go to jail for tax evasion, it’s quite rare. The IRS will exhaust all other efforts to settle tax disputes before involving law enforcement. Any call threatening jail time is a scam.

Protecting Yourself

Tax season never fails to bring out scammers. Protecting yourself can be easy if you know what to expect from fraudsters. A simple recipe to ensure you don’t fall victim is to:

• Never give out personal information or click links in unsolicited messages.

• Use a reputable tax preparer or file with the IRS directly.

• File your taxes early to prevent others from filing false returns.

• Choose direct deposit for your tax refund to avoid mail fraud.

• Monitor your refund to ensure it isn’t lost or stolen.

Once you file your taxes, you can monitor the status of your refund at https://irs.gov/refunds. Typically, refunds are received in less than 21 days for e-filers. If you file by mail, processing your return could take up to four weeks or more.

We’re Here to Help!

While tax time can be stressful, we’re always ready to help. If you feel you have been a victim of a tax scam, please stop by any branch location or call (949) 588-9400 to speak with a team member.

If you have questions about the status of your refund, please visit https://irs.gov/refunds. Unfortunately, we cannot tell when your refund will be deposited into your account.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.