Tax scams continue to lead the Better Business Bureau’s list of top scams in 2016, according to BBB Scam Tracker. Scammers take advantage of tax season to steal your hard-earned money. Better Business Bureau offers advice on avoiding schemes that could cost you.
Scammers will pose as IRS agents and instill fear in victims by demanding money or threatening jail time. Fraudsters will spoof phone numbers so the call appears to be coming from the IRS or local law enforcement. In some cases, con artists obtain a victim’s personal information, adding legitimacy to the demand for money.
You may see advertisements for companies claiming to reduce your tax liability. Scammers use official-looking IRS notices or websites to sway you into paying unnecessary money or giving out personal information.
Phishing e-mails circulate around tax time claiming refund issues or problems preventing taxes from being processed or threatening audits. Some appear to be from personal tax software asking you to confirm or reset your password. In most cases, these phony e-mails include hyperlinks directing you to bogus websites, where you’re asked to provide Social Security, bank account or credit card numbers. In some cases, these sites are designed to automatically install viruses and malware on your computer to steal personal information.
Scammers often use stolen personal information, Social Security numbers and falsified W-2 information to file fraudulent tax returns in the victim’s name. Often, W-2s are stolen out of unsecured mailboxes.
Unethical tax preparers may guarantee big refunds before completing returns, skim portions of your refund for themselves or overcharge for services. Some preparers offer instant refunds for fees, known as Refund Anticipation Loans, which are usually accompanied with a high interest rate, ranging from about 50 to nearly 500 percent.
BBB advises you to ignore unsolicited requests for personal information and never click on links or download documents from unfamiliar people or companies. Also, verify the legitimacy of requests with the IRS or business directly from a trusted number. E-file only from secure computers and make sure anti-virus software is up-to-date and never use public Wi-Fi to file tax returns. If you mail your tax documents, take them directly to the post office or a secure mailbox. If there are issues with your tax returns, the IRS typically contacts you by mail, not e-mail or phone. If you get a questionable e-mail from the IRS, forward it to email@example.com.
Before hiring a tax preparer, check them out with BBB. Go online to www.bbb.org or call 937-222-5825 or 800-776-5301. Discuss the cost of the service with tax preparers and ask for estimates. Fees should be based on the return’s complexity, not the refund or savings amount. Make sure the preparer signs the tax return and get a copy and payment receipt for your records. Review your return carefully before signing and get clarification on entries you don’t understand.
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John North is president of the Dayton Better Business Bureau.