Ending The Year Safe From Tax Fraud 

As the year draws to a close, many people are thinking about the new year, debts they are trying to manage, and the upcoming chore of filing their income tax return. Some will look forward with anxious anticipation of a refund while others will dread making a tax payment. Traditional and legitimate ways to save on taxes are not within reach of most taxpayers which makes them vulnerable to scams promising either a lower tax bill, a higher refund check, or both! This article will outline for your account holders some of the new ways that scammers are attracting their victims this year, as well as reminders about the classic scams that are still circulating. We’ll also share what to do if they think they’ve fallen victim to a scam, and we’ll remind them about the availability of our Identity Theft Recovery Advocates to minimize their losses. This article is blocked out into several topics that could stand on their own if you want to make this a series of messages out to your accountholders in anticipation of tax filing season.

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Ending the Year Safe from Tax Fraud 

Mixed in with holiday celebrations and preparations, December also brings with it end-of-year financial planning, and the familiar dread and stress of filing your income tax returns for the year. If finances are tight this year, or even if things are going well, the lure of too-good-to-be-true offers promising to maximize your tax refund might be too appealing to pass up. This month's article outlines some of the ways that scammers target unsuspecting victims, both with new tax refund scams and some reminders of the classic tax frauds that have been in circulation for years. Let us help you get a head start on tax season this year by protecting yourself and your loved ones from these financially disastrous scams.

In Relation to Your Unclaimed (and Unexpected!) Refund

A recently posted IRS consumer alert warns that a mailing some individuals have received misleads people into believing they are owed a refund. The letter looks official but includes contact information that isn’t directed to real IRS customer service agents. The letter requests identifying information (like a driver's license photo, financial account and routing numbers, and Social Security number) to prove the recipient of the “refund” is who they claim to be. If provided, this will give the scammer the information they need to steal your identity. Watch out for solicitations like this one and remember to only contact the IRS using legitimate methods from their official website, irs.gov

Fuel Tax Credit Scam

The IRS has seen an increase in promotions for filing for the fuel tax credit, described in this IRS consumer alert. This is a credit for federal tax paid on fuel and it is intended for off-highway businesses and farming use. It isn’t available to most taxpayers. However, unscrupulous tax return preparers and others convince individuals to increase their refunds by claiming the credit illegitimately. Scammers often promote the tax credit and charge a fee to file it, pocketing both the fee and the refund. When the erroneous filing is discovered, you will be on the hook for paying the money back to the IRS. 

Tax Avoidance Schemes 

While it sounds wonderful, a claim that your owed taxes can be dramatically reduced or eliminated is certainly too good to be true. These scams often target high-income individuals in the highest tax bracket. Known as abusive tax avoidance schemes, these scams can include predatory deals with investment insurance, conservation easements, or hiding assets internationally. Taxpayers should beware of any scheme that promotes a dramatic reduction in taxes owed. 

Year after year, tax preparer fraud and identity theft remain near the top of the IRS Dirty Dozen list of the worst tax scams and thus deserve another look. The scams mentioned above are often tied to these fraudulent activities, as they are promoted by fraudulent tax preparers who are ultimately out to steal or sell your identity. 

Tax Preparer Fraud

Tax preparers who operate in a gray zone or are out to only commit fraud against unsuspecting victims are unfortunately all too common, and these fraudsters refine their techniques to become more convincing each year. Illegitimate tax preparers will often be set up in a temporary location leading up to tax season and will be gone before you realize you’ve become a victim. They’ll offer extra deductions and credits you aren’t actually eligible for, drawing you in on the promise of a hefty refund. They will then direct that refund to their bank account, and you’ll be the one investigated for filing a fraudulent tax return. 

Watch out for these five red flags that your tax preparer may be a fraud.

And remember, if a tax preparer is willing to lie to get your business, they could be likely to steal your identity using the information you’ve provided for them to file your taxes. If you have further questions or feel that you’ve fallen victim to this scam, you can get assistance from the Taxpayer Advocate Service, an independent organization within the IRS. 

Tax Identity Theft

Tax-related identity theft occurs when a criminal uses your personal information to file a tax return in your name to claim your federal tax refund. Taxpayers might not know they’re the victim of tax identity theft until they try to file a return online and learn that one has already been filed using their information. One way to prevent tax identity theft is to request an Identity Protection PIN from the IRS. This is a six-digit number only known by you and the IRS, and it prevents someone else from filing a return in your name. Get your IRS Identity Protection Pin now. 

If you feel you’ve fallen victim to tax fraud, our Identity Theft Recovery Advocates are here to help! If you have an <EMBEDDED ACCOUNT> account, <FINANCIAL INSTITUTION> is standing by to help you identify proper resources at the IRS and walk you through this process. We will work for you and with you to help you recover from identity theft and minimize the losses and damage it causes. Feel free to reach out to us today or visit our website to learn more about identity theft remediation and other services included in your <EMBEDDED ACCOUNT> account at <FINANCIAL INSTITUTION>. 

Social Media Content

Use the social media posts below during December to inform your account holders about tax fraud and how they can help protect themselves and their loved ones from falling victim to these scams. 

Post #1: The end of the year is when many of us start to think about that upcoming tax bill and how to reduce it—or to increase our refund. Don’t fall victim to scammers promising just that! #YourProtectionPartner #TaxFraud

Post #2: Three new tax scams the IRS warns of this year include fraudulent mail claiming a big unpaid refund, false use of the Fuel Tax Credit, and tax avoidance schemes. #YourProtectionPartner #TaxFraud

Post #3: Do you know how to ensure your tax preparer is legitimate? If you use a fraudulent tax preparer, your money isn’t the only thing at risk—your identity could be compromised as well. #YourProtectionPartner #TaxFraud