Three Rules to Follow to Avoid Tax Scams

Did you know that since 2013, Americans have lost over $20 Million to tax scams? Small and medium businesses can fall victim to these scammers. Here's how you can prevent it from happening to you, your colleagues and your employees.

The IRS estimates that the public will have lost $21 billion (with a B!) to tax return fraud and identity theft by 2016. In the past, scammers targeted immigrants and the elderly almost exclusively, but these days they target everyone. As technology has advanced, so have their schemes.

How the Scams Work

Scammers reach out to their victims through email and over the phone.  They represent themselves as IRS agents and angrily threaten their victims with arrest or business closure if they don't pay up.  The scammers research their targets on social media sites such as Facebook and LinkedIn to add personal details to their scam.

Even hardened IT guys like me get these types of emails (see below).

IRS Email Scam

This is an IRS email scam. The email looks like it's from IRS.gov but it's actually from a suddenlink.net address. The grammar is also very poor.

So what are these scammers after?  They either want a quick payout or access to your private information.  If the scammers are after money, they will ask for unconventional payments, such as untraceable Western Union payments or MoneyPak (or similar) payment cards. Scammers looking to steal your identity will want access to your personal information, such as Social Security Number, so that they can file a false income tax return in your name.

Don't Let It Happen to You

You can protect yourself and your business from these types of scams with some basic security.

#1: Individuals and businesses should NEVER respond to emails or phone calls claiming to be from the IRS. 

If you receive an email purporting to be from the IRS, you can safely delete it.  The IRS will never send unsolicited emails about your taxes.   Even if you owe taxes, the IRS will always mail you a bill through the US Postal Service and will always offer the ability to appeal.

Phone scammers will demand payment immediately through Western Union or money order/debt card.  Some scammers will even demand payment in Amazon.com gift cards.  This is a huge red flag as the IRS would never ask for or accept these types of payment.

Train your employees to forward any suspicious calls or emails to the accounting or IT department for verification.

#2: To prevent identity theft, individuals and businesses should carefully guard their SSN or TID numbers and their IRS PIN. 

Never give them out to anyone.

It's also a good idea to create an IRS account in your name to prevent others from creating a fake account (please note that IRS websites should always have irs.gov in the address.  If you see anything other than .gov, it's a scam site).

#3: To prevent scammers from gathering information about you, be careful what details you post about yourself or your company online. 

For example, if you post about your pets on Facebook, never use your pet's name as a security question.

To add an additional layer of social media protection, make sure you lock down your profile to only trusted friends.  You can see what your profile looks like to the public at this Facebook link. Change your Facebook, LinkedIn, Twitter and other social media privacy settings to private.

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