THE BLOG

Protect Yourself from IRS Tax Scams

04/01/2014 01:10 pm ET | Updated Jun 01, 2014
  • Andrew Wang Owner and portfolio manager, Runnymede Capital Management

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With tax season upon us, taxpayers are not the only ones preparing for tax filing day. The Internal Revenue Service warns consumers that there are sophisticated scams targeting taxpayers throughout the country.

You cannot let your guard down because scammers are staging a multimedia assault using email, phone, fax, websites, and/or mailed notices posing as the IRS. Many scams use the IRS name and logo that make communications appear authentic. Some tempt the victim with refunds while others threaten penalties including loss of driver's license or loss of business. The end goal is typically the same. The scammer wants to trick you into revealing your personal or financial information -- including Social Security number, bank account number, credit/debit card number -- in order to steal your identity or money. Here are a few tips on typical scams and what you need to know so you can stay in good graces with Uncle Sam, and steer clear of Uncle Scam.

Phone Scam

The Treasury Inspector General for Tax Administration (TIGTA) said it has received more than 20,000 complaints, in the past eight months, from people who have collectively paid more than $1 million to scammers. "This scam has hit taxpayers in nearly every state in the country," said IRS Acting Commissioner Danny Werfel.

How it works: Fake IRS agents call you demanding payment by prepaid debit card or wire transfer. The caller often masks his caller ID, making it look like the call is coming from the IRS. In some cases, the caller knows the last four digits of Social Security numbers and follows up with official-looking emails.

What you need to know: Real IRS agents usually initiate contact by mail and never demand payment by debit card, credit card or wire transfer. If you receive a call, ask for a call back number and employee badge number. You should contact the IRS at 1-800-829-1040 to verify the contact and determine if the IRS has a legitimate need to contact you.

Phishing Scam Using Email and/or Fake Website

How it works: Phishing scams usually begin with an unsolicited email with a link to a fake website that looks very authentic. The scammer tries to get you to send or enter your valuable personal and financial information online permitting identity theft.

What you need to know: The IRS does not send unsolicited emails to taxpayers and never asks for your personal information via email, text message or social media. The official IRS website is www.irs.gov. Do not be confused or misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations other than .gov.

If you receive an email from someone claiming to be the IRS or directing you to an IRS site:

  • Do not reply to the message
  • Do not open any attachments. Attachments could contain a virus or malicious code.
  • Do not click on any links. Do not enter your confidential information at any website.

Watch this IRS video about phishing.

Cyber criminals are becoming more sophisticated and scams more pervasive. It is critical to stay alert so that you do not become a victim. Remember to keep your antivirus software up-to-date and be careful of what you click.

Helpful Links:

This post originally appeared at the Runnymede Blog.

Have you been a target of identity theft or tax scams? Share your experience or tips to help others.

photo credit: 401(K) 2013 via photopin cc

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