Beware of Tax Filing Scams
It’s tax time! Unfortunately, that means there are thousands of scammers looking to steal your information and tax refund by posing as authentic tax preparers. Here’s all you need to know to beware of tax filing scams and how to keep safe.
How the scam plays out
In a tax filing scam, a victim will hire an alleged tax preparer to do their taxes. The scammer then uses the victim’s information to file a tax return in the victim’s name. They’ll change essential details on the tax form, such as a checking account number or mailing address, and then collect the victim’s refund. By the time the victim realizes what’s happened, they’ve lost the money owed to them by the IRS and are now vulnerable to more profound identity theft.
Protect yourself
The best way to stay safe from a tax filing scam is to research before hiring a tax preparer.
First, avoid pop-up ads when choosing a tax preparer, especially those riddled with typos. Research any preparers you are considering hiring by asking for references from previous clients and by looking for a physical address on their website. Be suspicious, as well, if they promise a significant return without knowing anything about your finances.
Second, before hiring an individual or an agency to do your taxes, ask to see their Preparer Tax Identification Number (PTIN). If the “preparer” refuses to share their PTIN, it is a scam.
Finally, if you’ve already hired a preparer but you’re suspicious about their authenticity, look for these red flags:
- The preparer inflates numbers that affect your tax liability.
- They claim ineligible individuals as your dependents.
- If they ask you to sign a blank form and promise to fill out the remainder after you sign.
- Another red flag is if a preparer refuses to sign your form.
- And if your tax preparer follows any of the above practices, terminate your relationship with them immediately.
If you find yourself as a target
If a tax filing scam has targeted you, report it to the authorities as quickly as possible. Let the FTC know about the scam and alert the IRS. You are now vulnerable to identity theft if you share personal information with the scammer. Check out the federal government’s page on identity theft recovery to learn what steps to take next.
Now you know how to beware of tax filing scams and how to protect yourself, share it with your family and friends. And if you like this post, check out our other posts on MoneySmart Tips.
