As we all know, tax season is upon us and the stress of this time is in full bloom. However, there are some additional issues that do not often make to it to the light - the scams and frauds that ooze from every corner of the internet and occasionally local shops. These are referred to by the Internal Revenue Service as the "Dirty Dozen". The following topics are the issues that the IRS has identified as common problems that arise during everyone's favorite time of year! We're going to take a closer look at six of these items - below are six of the dozen, the most commonly encountered issues.
1. Identity Theft: It seems every time you turn on the radio, television, or check your email, you are bombarded with identify theft information and warnings. This is because identity theft has become an epidemic, and it's a hard one to protect against. Encrypted emails and face-to-face conversation are two tactics that we recommend for this one.
2. Phone Scams: This one has become a major problem in the last couple of years. The IRS and FBI are constantly sending out warnings about phone calls. Basically, if the IRS wants to communicate with you, they'll do it via mail. If you see unknown numbers, it's best to disregard those calls. And as always, never give out your social security number or other personal information.
3. Phishing: The good ole email scam. This one ties in one #1 and #2 - any unusual email or website should be approached with caution. The IRS will never contact you about a refund or other issue as their first line of communication. Be wary of emails that have familiar contact, but strange or empty subjects, or those with strange attachments.
4. Return Preparer Fraud: A lesser-occurring issue is return preparer fraud. This is individuals or businesses that setup shop with one thing in mind: your money. They will do things such as refund fraud - which is basically where a return is filed but the refund is directed to the fraudster's account. Always seek out legitimate and vetted tax professionals.
5. Inflated Refund Claims: Taxpayers should be wary of any promises of refunds prior to a filing, particularly those who claim to be able to get an astronomical refund for you. These folks fit the mold of the return preparer frauds, and will employ various marketing tactics and even setup false storefronts to attempt to deceive taxpayers.
6. Fake Charities: One of the toughest to comprehend items pertains to fake charities. After seeing a friend personally deceived by a false representation of The Wounded Warrior Project, I have taken interest in this issue. Always be on the lookout for obviously false charities or those who only appear to be representing the real ones. A phone call to verify is always an easy way to avoid losing your hard-earned money. You may also notice a lack of materials and marketing.
Although these items are commonplace each year, all is not lost. The Federal Bureau of Investigation and the Internal Revenue Service are getting better at tracking down the folks that commit these frauds. Our advice is to also monitor all of your critical items - you tax refunds, your credit report, your credit cards and bank accounts. These will be your major identifiers should you fall victim to these problems.
Jeremy S. Starkey | Accounting & Assurance Staff
Jeremy joined the firm in October of 2014. Prior to joining the firm, Jeremy spent his career in corporate accounting. He was the controller in a family-operated business with his father and father-in-law, as well as a corporate accountant / global strategic specialist for Siemens Energy. Jeremy's main focuses within the firm are bookkeeping, corporate and personal tax returns, as well as some audit work on occasion.
Jeremy received a Bachelor's of Science in Accounting from the University of Alabama in Huntsville. He is currently in the process of studying and preparing to sit for the CPA exam and the Certified Fraud Examiners (CFE) exam.
Jeremy lives in Rainsville, Alabama, with his wife Elizabeth and their children, Jude and Olivia. When not lounging in his office chair, Jeremy enjoys football (Roll Tide!), canoeing, fishing, cooking, and spending time with the kiddos.