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Friendly Warning: Tax Season is ‘Fraud’ Season

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Tax season fraud and malware campaigns have a seemingly endless number of ploys, often using flagrantly aggressive tactics, like applying threats and an extreme urgency to act or face fines, imprisonment, or legal action.

Not surprisingly, a big focus in fiscal year 2020 was COVID-19-related fraud. In all, the Internal Revenue Service's Criminal Investigation Division identified $2.3 billion in tax fraud schemes last year.

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Tax season-related phishing emails are rampant. Many are designed to steal financial information and/or infect machines with malware, to include ransomware, which prevents you from accessing a computer until a ransom is paid to the attacker. Subject lines used in tax-season scams include “RE: Your eTax form is ready” or “Your tax return.” These scammers are crafty, so be cautious about any tax-related email sent to your inbox from an individual or email address you don’t know.

“Fraudsters prepare for tax season with all the ardor of students preparing to take the SAT,” said Chelsea Budzko, Information Security Officer at SELCO. “These criminals are assertive, well-trained in their deceptive discipline, and know how to play the human psyche like a first-chair virtuoso, commonly using fear, extortion, and/or a sense of urgency. Preventing yourself from becoming a victim of tax fraud means being aware and diligent during tax season.”

Scammers are crafty, so be cautious about any tax-related email sent to your inbox.

It’s important to know that the IRS will never do the following, but scammers’ tactics commonly include:

  • Demanding immediate payment using a prepaid debit card, gift card, or wire transfer.
  • Threatening to immediately bring in local police or other law enforcement.
  • Asking for a credit or debit card number or a password/PIN over the phone.
  • Demanding payment of taxes without giving you the opportunity to question or appeal the amount.

Some Common Scams

The below excerpts are taken from the IRS’s “Dirty Dozen” list of tax season scams (2020):

Phishing: Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or refund. Don’t click links within emails that claim to be from the IRS. Criminals are constantly unleashing emails and websites designed to steal your personal information.

The following email scenarios should raise red flags:

  • You don’t know the sender and the email includes an attachment or link.
  • You know the sender, but the email is unusual and not expected.
  • The email claims to be directly from the IRS, but the sender’s email address is not associated with the IRS.
  • Emails are purporting to be from the IRS—be a healthy skeptic!

EIP or Refund Theft: In 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided two rounds of Economic Impact Payments (EIP). And with the third stimulus likely coming down the pike, the IRS warns of criminals attempting to steal those payments.

Social Media Scams: Social media is a free-for-all for sharing information with just about anyone. Scams conducted through these channels frequently prey on events like the COVID-19 pandemic to try tricking people.

Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with arrest, deportation, and license revocation.

Return Preparer Fraud: There are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft, and other scams that hurt taxpayers.

Fake Charities: Be wary of charities with names close to nationally known organizations. The IRS website (irs.gov) has the tools taxpayers need to check out the status of charitable organizations.

Help spread the word about these scams to cut the profits for fraudsters this tax season.

“Your money was hard-earned and belongs to you,” Budzko said. “Protect it.”

Victim of Fraud?

If you've been a victim of tax fraud, you can find instructions for reporting it on the IRS website. For additional information about personal security, visit SELCO’s Security Center.

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