Steven Elliott, MST, CPA
Lead, Sr. Tax Manager
Tax scams remain an ongoing threat. Here are a few trends to be aware of ahead of the filing season, along with steps you can take to help stay safe.
Tax scams remain an ongoing threat and cost billions annually. Scammers are especially active during the tax-filing season. While some thieves target sensitive personal information to steal an identity, others are after your tax refund and credits. With the opening of tax season this month, filing promptly and being vigilant can go a long way in mitigating some of these threats. Here are a few other trends to be aware of, along with steps you can take to help stay safe.
Income tax identity theft is not a new scam, but it’s still a significant problem. Using stolen Social Security numbers and other personal information, thieves attempt to claim refunds and credits that belong to others. They often report false income, deductions, and credits in a fake tax return, aiming to increase the refund amount. Such theft can delay legitimate refunds due to the time-consuming process of rectifying IRS discrepancies. Ultimately, safeguarding your Social Security number and other personal information is key to in helping to prevent income-tax identity theft. Being proactive in tax planning can help protect you as well.
Because of ease and security, around 90% of taxpayers choose electronic filing for their tax returns. Last year, just two weeks before the April 18, 2023, filing deadline, news broke that eFile.com, an IRS-authorized e-filing software service, had been hacked. Users were tricked into downloading malware through a seemingly legitimate browser “network error” message (see Figure 1). Malware of this type is often used to glean personal and financial information or to steal a person’s identity.
Figure 1: A malicious network error message that infected computers with malware. Source: Malwarebytes Labs1
Given the website’s heavy traffic amid the pressing need to file tax returns, the malware campaign against eFile.com likely affected a substantial number of users. The key takeaway is to avoid clicking on unfamiliar links when preparing taxes electronically. Enabling dual-factor authentication and using a security freeze (also known as credit freeze) are other recommended precautions against this type of fraud. Learn more about freezes at each of the national credit bureaus: Equifax, TransUnion, and Experian.
Because TurboTax is a popular online tax-preparation service, an identity thief might target its large client base by posing as a TurboTax employee and informing the intended victim that their electronically filed tax return had been rejected by the IRS. The identity thief would then attempt to obtain the victim’s Social Security number and other personal information. To make their call seem legitimate, the thief would use a technique called “spoofing” to manipulate caller ID to appear like a number belonging to TurboTax.
As I often say, “Trust me—you can’t trust anyone,” particularly someone who’s asking you to provide sensitive personal information. In this case, it’s important to know that TurboTax won’t call if your tax return has been rejected, unless you’ve specifically requested a call. If you receive such a call and want to verify that it’s legitimate, simply hang up and call the TurboTax customer-service number (1-800-446-8848) to be sure.
Ever receive a call from the Internal Revenue Service saying you owe them money? Probably not. The IRS doesn’t call and ask for immediate payment by credit card, gift card, or debit card. Instead, they’ll first send a letter saying you owe taxes. Be wary of phone calls that include threats, requests for personal information, or demands for immediate payment. The theme can have many variations, but the goal is usually to extract payment or personal and financial information:
If someone calls you first, leaves a pre-recorded voicemail, demands immediate payment, or asks you to pay with a gift card, it’s likely a scam. The IRS doesn’t do any of those things.
A scammer might also send a letter that appears to be from the IRS and says the recipient has an unclaimed tax refund. The letter might come in a cardboard envelope and ask for a photo of a driver’s license or sensitive information such as phone number, bank account number, or Social Security number. These letters often are poorly written, with misspellings, improper grammar, and other red flags. If you’re unsure about the status of a refund, check directly using the IRS official website. on the IRS has also issued a warning about emails from fake IRS agents and urged recipients to avoid clicking links or sharing personal data.
The best way to avoid income tax refund scams and other fraud is to verify. Remember: The IRS doesn’t initiate contact via phone call, text message, or email. Assume that it’s a scam if the outreach is not an official IRS correspondence sent through regular mail.
Learn more about connecting the dots of your financial life.
All investing involves risk, including the possible loss of principal. Portfolio management strategies such as diversification, asset allocation, and rebalancing do not ensure a profit or guarantee against loss. There is no guarantee that any investment strategy will achieve its objectives. Mercer Advisors is not a law firm and does not provide legal advice to clients. All estate planning document preparation and other legal advice are provided through select third parties unrelated to Mercer Advisors. Mercer Advisors Inc. is a Delaware corporation and is in no way affiliated with Mercer LLC, Mercer Investments, or the Marsh & McLennan Companies. Mercer Global Advisors Inc. is registered with the Securities and Exchange Commission and delivers all investment-related services. Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Terms & Conditions | Privacy and Security Center | Firm Brochure Adv Part 2A | Form CRS.
©2024 Mercer Global Advisors Inc. All rights reserved.