File or Shred? How Long to Keep Important Financial Records
- Financial Education
- Frontwave Credit Union
The old saying goes there’s only two things that are certain in life: death and taxes. One other thing that’s certain to follow anytime there’s money to be made? Scammers.
According to the IRS, thousands of people have lost millions of dollars and their personal information to tax scams over the years. Scammers use all kinds of techniques to try to cheat people out of their hard earned money, from fraudulent letters and phone calls, to emails and social media. And no one is immune: individuals, businesses, and payroll and tax professionals have all been caught in the scammers’ crosshairs.
Fortunately, you can help protect yourself. First, remember that the IRS (like Frontwave Credit Union) will never call, text, or email you to request personal or financial information. Second, learn how to spot the signs of tax scams, many of which are phishing scams.
How Tax Phishing Scams Work
Tax phishing scams are when criminals impersonate the IRS or companies in the tax industry (such as a tax preparer) to try to trick unsuspecting victims into revealing personal and financial information that can then be used to steal their identity. Scammers may reach out via email, phone or text, seeking information related to refunds, filing status, confirming personal information, ordering transcripts, or verifying PIN information.
There are different variations targeting different types of tax payers. For example, the IRS says a recent phishing scam involves the targeting of students and staff members with “.edu” email addresses. Some other scams have targeted employees of payroll companies, trying to trick them into revealing large amounts of W-2 data.
Signs to Watch For
Be alert for bogus emails, texts, or calls that appear to come from the IRS or from your tax professional requesting personal or financial information. The IRS does not use these methods, and you should confirm with your tax professional that any communication you receive is valid before providing information. (Call them directly at a number you know is correct — not one in the email or text.)
Also be alert for emails and text that ask you to click on a link. The sites they direct to may ask for information that can then be used to file false tax returns, or they may carry malware, which can infect devices. Distorted logos or URLs that don’t quite look right (think IRSs.com instead of IRS.gov) are common signs of scams.
Other Tax ScamsAccording to the IRS, other tax scams to watch out for include:
- Identity Theft & Unemployment Benefits — Millions of Americans lost jobs permanently or temporarily in 2020 due to the pandemic and received unemployment benefits. Recently it has been discovered that certain criminals tried to exploit the situation, filing for fraudulent unemployment benefits using stolen identities. Some taxpayers are only discovering this when they receive a Form 1099-G “Certain Government Payments” with box 1 on the form showing “Unemployment Compensation.” If you unexpectedly receive such a form and you did not receive unemployment benefits in 2020, visit the IRS Identity Theft and Unemployment Benefits website to learn what next steps to take.
- Ghost Preparers — When you use a CPA or tax preparation service to do to your taxes, they are required to sign those returns. A ghost preparer is someone who doesn't sign tax returns they prepare. Not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund.
To learn about the latest financial scams and how to avoid them, check out the Federal Trade Commission’s Consumer Information portal or sign up for one of our free virtual workshops.