Scammers Close in as Tax Season Opens
Filing season marks the return of Tax Schemes
Rockford, IL – January 24, 2023 – This week kicks off the 2023 Tax Season, so the Better Business Bureau is alerting the public to the schemes that con artists will use over the next several weeks to take your money, personal identity information, and peace of mind.
It will be taxing as people prepare to file with the Internal Revenue Service (IRS). And, as the tax season picks up, scammers will capitalize on the pressure taxpayers are under. This year’s filing deadline is Tuesday, April 18.
“No matter how you get your taxes done, you could encounter a scam attempt,” says Dennis Horton, director of the Rockford Regional Office of the BBB. “As the 2023 tax season opens, tax scammers come out of the woodwork. These cons come up with creative methods to entice busy consumers to fall for their tricks. They utilize imposter phone calls, texts, emails, and even phony letters to capitalize on the fears and emotions when filing taxes.”
Tax Identity Theft occurs when a scammer uses your Social Security number to file a tax return in your name and collect your refund. Scammers steal your tax information in several ways. It could be a phony tax preparation service, a data breach, a hack, or a phishing scam, where you are tricked into clicking on a link in a text message which downloads malware to your device.
Victims of tax identity theft typically don’t realize they’ve been targeted until they actually file their taxes or even later. It’s when they get a written notice from the IRS saying more than one tax return was filed, or they were paid a salary by an employer they don't know.
Email Phishing Scams appear to be from the IRS and include a link to a bogus website intended to mirror the official IRS website. These fraudulent emails direct you to update your IRS e-file immediately, or there is a problem with your taxes and sometimes mention USA.gov or a variation of the real IRS site. Scammers want you to call the fake number in the email or click on a link so they can download malware on your device; or access your personal financial information.
IRS Impersonation Scams most often start with a phone call and take two basic forms.
In the first version, the IRS “agent” says you owe back taxes and pressures you into paying by prepaid debit card or wire transfer. The scammer threatens you with arrest and fines if you don’t comply. In the other version, scammers claim they are issuing tax refunds and ask you for personal information so they can send you your refund.
The scammer might even give a fake badge number and name. Your Caller ID may look like the call is coming from Washington, D.C. Con artists sometimes follow up scam calls with an email, which uses the IRS logo, colors, and official-sounding language.
Scammers usually try to push you into action before you have time to think and often insist that payment be made immediately by wire transfer, prepaid debit card, or other nontraditional payment methods, which are mainly untraceable and nonreversible.
“Ghost” shady tax preparers set up shop around tax time, usually in a vacant storefront. They will often promise tax filers fast or large refunds. These “ghost” tax preparers are uncertified individuals who bypass checks and balances in the tax preparer certification system. Even more disturbing, the big refunds they promote are not calculated in legal ways.
Ghost tax preparers actually do prepare the tax return, but when it's submitted to the IRS, these scammers ask the taxpayer to sign their own return, making it look like it was self-filed. This doesn't seem like a big deal until something goes wrong and the preparer is nowhere to be found.
On a State level, The Illinois Dept. of Revenue has promised an enhanced MyTax Illinois system that allows taxpayers to file returns with or without an account and operates with a simple question-and-answer format. IDOR prevented over $62 million in fraudulent or erroneous refunds from being issued in the last year.
If a taxpayer files electronically (Over 90% of state taxes are filed this way) and there are no errors, taxpayers can receive a direct deposit refund in approximately four weeks.
In addition to being able to file Form IL-1040 for free through MyTax Illinois, individuals may also utilize the site to make payments, respond to department inquiries, and check the status of their refunds using the Where's My Refund? link. You can visit IDOR's website at: tax.illinois.gov.
BBB Tax Time Tips:
- The best way to avoid tax ID theft is to file your taxes as early as possible before a scammer has the chance to steal your information and file a fake tax return.
- Always check out a new tax preparer before you do business with them, and a great place to start is with BBB.ORG for ratings and reviews.
- Ask any tax preparer you are thinking of hiring what security steps they will take to protect your data.
- Check out websites carefully and make sure you access the actual IRS website when filing your taxes electronically or inquiring for additional information.
- When in doubt, contact the IRS directly to verify any contact, not a number in an email or text.
- The IRS will never threaten you or demand immediate payment, require a specific form of payment, or ask for credit card or debit card numbers over the phone.
- Be wary of a tax preparer offering fast refunds or large returns. What you owe is solely based on your past year's tax information and the current tax laws.
- Only allow funds to be deposited into your personal accounts. Some ghost tax preparers will have funds deposited into their own accounts “to be later distributed.”
- Review your tax return before it's submitted to ensure it was signed properly by your tax preparer.
- Be wary of spectacular promises. Avoid tax preparers who offer “refund anticipation loans” as you’ll probably lose a large percentage of your return to commission fees.
- Think about availability. If the IRS finds errors in your tax forms or decides to perform an audit, will your tax preparer be available to help you with the details? Find out whether you can contact the tax preparer all year long or only during tax season.
- Contact the IRS immediately if you get: a written notice from the IRS about a duplicate tax return, a notice stating that you received wages from a company that you never worked for, or any notice that “additional taxes are owed, the refund will be offset, or a collection action is being taken against you.”
- Protect your Social Security number (SSN). Do not give out your SSN unless you are 100% sure you are dealing with someone you trust.
For More Information
If you’ve spotted a tax scam (whether or not you’ve lost money), report it to BBB ScamTracker. Visit BBB.org or follow us @ChicagoBBB on social media. Look for the BBB seal, The Sign of a Better Business.
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About BBB:
BBB of Chicago and Northern Illinois is a nonprofit organization that has served both consumers and trustworthy businesses for 96 years and is a part of the IABBB. We help protect consumers from scams and provide a free database for consumers to see business ratings and reviews to find businesses they can trust. We connect customers to businesses they can trust.
The International Association of Better Business Bureaus (IABBB) is the network hub for BBBs in the US, Canada, and Mexico.