Introduction: As tax season rolls around, it’s not just the IRS you need to be prepared for. The Better Business Bureau (BBB) has issued a warning about the rise in tax scams during this period. From identity theft to phishing emails, these scams are designed to steal your money, personal information, and peace of mind.

Understanding the Scams:

  1. Tax Identity Theft: This scam involves a criminal using your Social Security number to file a fraudulent tax return in your name and then pocketing the refund. Victims often remain unaware until they file their taxes and discover another return has already been filed. It’s not just about losing a refund; this can lead to significant legal and financial complications.
  2. Email Phishing: These scams use fake emails that appear to be from the IRS or another trusted entity. The emails often contain links to websites that either infect your computer with malware or trick you into entering personal and financial information. These websites can be highly convincing, mimicking the look and feel of legitimate government sites.
  3. Impersonating IRS Workers: Here, scammers call, claiming to be IRS agents. They often use fake names and bogus IRS identification badge numbers. These calls can be aggressive and threatening, demanding immediate payment of taxes owed and often instructing victims to use specific payment methods like prepaid debit cards, gift cards, or wire transfers.
  4. Phony Tax Preparers: Some scammers set up fake tax preparation businesses to access sensitive personal and financial information. They may promise inflated refunds, file false claims for rebates or credits, or even divert your refund to their accounts. It’s essential to verify the legitimacy and credentials of any tax preparer or service.
  5. Refund Anticipation Scams: These scams involve a tax preparer offering you an immediate tax refund or a loan against your anticipated refund. However, the fees and interest rates charged can be exorbitant, and there’s a risk that your refund won’t be as large as anticipated, leaving you in debt.
  6. Social Media Scams: Scammers use social media platforms to obtain personal information by offering bogus tax services or pretending to be friends or family in need of tax help. They may also use hacked accounts to send convincing messages.
  7. Charity Donation Scams: These scams involve fake charities that claim to be collecting donations for tax deductions. They take advantage of people’s generosity and desire to get a tax deduction, stealing money and personal information in the process.

How to Protect Yourself:

  1. Research Before Hiring: Always research a business thoroughly before hiring them for tax preparation.
  2. File Taxes Early: Filing your taxes as early as possible can prevent scammers from filing a fraudulent return in your name.
  3. Check Tax Preparer’s Background: Verify the credentials and background of any tax preparer or service you plan to use.
  4. Use Official IRS Channels: For electronic filing, always access the IRS website directly.
  5. Be Wary of Threats and Promises: Remember, the IRS will never threaten you, demand immediate payment over the phone, or promise unusually large and fast refunds.
  6. Direct Deposit Refunds: Opt for direct deposit of refunds to reduce the risk of check fraud.

A Word from the BBB President: Steve J. Bernas, president and CEO of the BBB, emphasizes, “Regardless of how you choose to have your taxes prepared, you could encounter a scam attempt. As the 2024 tax season opens, tax scammers come out of the woodwork, often starting with fear tactics through phone calls, texts, emails, and phony letters.”

The Impact of Tax Scams: According to the IRS, taxpayers lost a staggering $5.7 billion to tax scams and fraud in 2022 alone. This highlights the critical importance of staying vigilant.

Conclusion: With the tax filing deadline of April 15 approaching, it’s crucial to stay alert and informed. By following these guidelines and staying aware of the common scams, you can protect yourself from becoming a statistic in this year’s tax scam reports. Remember, when it comes to taxes, it’s better to be safe than sorry.

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