Tax Time Fraudsters Working Overtime

With tax time fast approaching, the scam artists are out in droves. They are using a variety of ploys to fool consumers and engage in identity theft. Although most of these tricks have been used in the past, consumers continue to fall for them.

Most of the scams that people fall for use either e-mail or telemarketing to make contact. And many of them will claim that the contact is being initiated by the IRS. The first thing you need to know to protect yourself is that the IRS will not call you and ask for your Social Security Number. They already have that information. Nor will they call and ask for bank account or credit card numbers. Anyone receiving a call like this should immediately be on their guard.

Here is a rundown on some of some of the most popular scams this year:

Tax-Refunds.IRS.Gov

This is a phishing scam. Victims receive an e-mail message that appears to come from the IRS. The URL used is either tax-refundsirs.gov or tax-refunds.irs.gov. The e-mail message appears to be from the IRS and requests detailed financial information from the recipient which may include SSNs and bank account numbers.

Those that fall for this scam will find that their identities are quickly stolen and their bank accounts may be drained.

Consumers should know that the IRS never requests detailed financial information via e-mail. You should also know that e-mail is not a secure method of providing this type of information to anyone. You should never include your SSN in an e-mail message or a message attachment.

Anyone receiving this kind of message can call the IRS at 800-829-1040 to report it.

W-2 Fraud

Some con artists are contacting consumers and offering to issue fake W-2’s which show that they have overpaid their taxes. Consumers are asked to supply their Social Security Numbers, which the con artist will use to generate the W-2 and a phony tax return. Consumers are told that when the refund arrives, it will be split with them.

Any consumer who falls for this is not only a victim, but may be a criminal too. They are conspiring to defraud the United States Government, which can lead to a prison sentence.

Military Service Refunds

Victims are contacted and told that they are eligible for a $4,000 tax refund because of a relative’s military service. They are asked for a credit card number to pay a fee between $25 and $50 to cover postage and handling.

The IRS does not charge any fees for postage and telephone agents are not authorized to collect credit card information from consumers.

Social Security Refunds

Consumers are contacted and told that they are entitled to a refund of some of the Social Security taxes that they have paid over their lifetime. Victims are asked to pay a paperwork processing fee along with a fee covering a percentage of the anticipated refund.

Current law does not allow for Social Security tax refunds.

Home Based Business Setup

In this scam, victims are told that if they setup a home based business that they will be able to write off most of their personal expenses. They may be told that these include principle payments on their mortgage, utility payments and automobile payments. They are asked to pay corporate filing and paperwork fees that can exceed $1,000.

While the victims of this scam may wind up with a shell company, that’s about all that they will get. The IRS regulates closely the deductions that people can take for home based businesses. Any deductions that consumers attempt to take that are outside of the law will be denied and the consumer can find that they not only have to pay the back taxes and interest, but penalties too. If it can be shown that the consumer blatantly violated the law, prosecution is also a possibility.

Pay the Taxes, Get a Prize

This is one of the oldest scams around. Consumers are contacted and told that they have one a great prize. It could be a boat, a car, a house or a trip. All they have to do to collect is pay the income tax on the price. They are then asked to provide a credit card number or mail in a check.

Any company that is awarding a legitimate prize will issue an IRS form 1099 to the consumer. It is the consumer’s responsibility to pay the taxes directly to the IRS, not to the company awarding the prize.

Tax Collector at the Door

This scam is a little different because it involves people going door to door.

Consumers receive a knock at the door from someone claiming to be with the IRS. They are there to collect back taxes, or perhaps to inventory assets. Many consumers are so afraid of the IRS that they automatically open their doors and let these people into their homes.

If the IRS is coming out to your home, they will normally call to schedule an appointment. If anyone shows up at your door and claims to be from the IRS, you should get their identification. All IRS agents and collectors carry official identification and will be happy to let you examine it. If someone simply flashes a badge at you but refuses to let you closely examine it, or if you have any reason to suspect that the person at the door is not from the IRS, lock your door and don’t let them in. Call the police and then call the Treasury inspector general's hot line at 800-366-4484 to report the incident.

Technorati Tags : fraud+alert, identity+theft, id+theft, fraud, credit+card+fraud, IRS, internal+revenue+service, scam, scam+artists, phishing, phisher