BBB Alert On Tax Scams | Neighbors Federal Credit Union

BBB Alert On Tax Scams


It’s Tax Return Season

And unfortunately, that also means tax scam season. Here are some tips from the BBB on avoiding these scams.

Tax scams are among the most stubborn cons out there. They reappear often, each time with a slightly different spin. The main theme is scammers posing as the Internal Revenue Service (IRS) and trying to trick you into either paying up or sharing personal information.

How the Scam Works:

These 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. If you don’t comply, the scammer threatens you with arrest and fines. In the other version, scammers claim they are issuing tax refunds and ask you for personal information so they can send your refund. This information can later be used for identity theft. Scammers also use this approach to target college students by claiming a “federal student tax” has not been paid. These imposters often go to great lengths to appear real. The scammer may 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. In many instances, these scams start with a serious and official sounding “robocall” recording.

Tips to Spot This Scam:

You are pressured to act quickly. Scammers typically try to push you into action before you have time to think. The IRS will give you the chance to ask questions or appeal what you owe. Also, their first contact with you will always be by mail, not phone or email.

Payment must be made by wire transfer, prepaid debit card, or other non-traditional payment methods. These methods are largely untraceable and non-reversible. The IRS will never demand immediate payment, require a specific form of payment, or ask for credit card or debt card numbers over the phone.

Here are some ways consumers and business owners can combat tax fraud:
  • Only deal with trustworthy tax preparation services. Check BBB.org for the latest Business Profile before you engage a company for the first time.
  • Protect personally identifiable information (PII) such as birth date, Social Security numbers, bank accounts, etc.
  • Check out websites carefully and make sure you are accessing the real IRS website (irs.gov) when filing your taxes electronically or inquiring for additional information.

If you get tax information delivered electronically from your employer or other entity, treat that information carefully. Download it onto a password-protected computer. Understand how tax scams work and be on guard for “red flags” such as calls before you’ve received any kind of letter from the IRS demanding immediate payment, threats or intimidation.

Remember, it’s always a good idea to visit our Fraud Protection Center.