IRS Tax Scams to Watch Out for in 2017 - Part 2

We talked about three of the most common IRS tax scams in Part 1 of this series on IRS Tax Scams to Watch Out for in 2017. Here we look at more such tax scams which wreaked havoc on ordinary citizens.

#1: Tax Preparer Scam / Obamacare Scam

One of the anomalies in US tax laws is that anyone can claim to be a tax prepare. There is no qualification needed to be a tax preparer. Luckily though most people who offer to do your taxes are qualified accountants and CPAs and they try to do their best. However, there are some frauds that get into this business.

The Affordable Care Act, or Obamcacare, for example, makes it mandatory for people to get health insurance. Those who don’t apply for this can get penalized. But most people who don’t qualify for Obamacare get exemptions so that they don’t need to pay the penalty.

 The only issue with this is that there is a new tax scam where some tax preparers are telling their clients that they own the government a penalty on Obamacare and have to pay the amount in cash to them, otherwise it is not possible to file their tax returns. Remember  - even if you owe any money to the IRS, that should be paid to the IRS by check. Never to the tax preparer with cash!

 #2: Snail Mail Scam

The snail mail scam is similar to the Obamacare scam discussed earlier. Here you will get a tax bill – completely fake – that says that you owe a penalty to the government for not possessing health insurance under the Affordable Care Act. This looks like a legit communication from IRS, but it is not that.

The IRS says that scammers from across the nation are sending fraudulent versions of CP2000 notices. These are letters that inform taxpayers stating discrepancies related to their tax return.

Since this scam happens through snail mail, it is very difficult to detect, and can fool a lot of people. Here’s how you can spot it. The fraudulent snail mail is issued from “Austin, Texas” and relates to the Affordable Care Act. It lists the payment voucher as 105C and wants the check to be made out to the I.R.S. and delivered to “Austin Processing Center”.

#3: IRS iTunes scam

This is a recent scam in which someone claiming to be from the IRS duped a young college student into putting hundreds of dollars into different iTunes cards for wrongly representing her tax returns. iTunes gift cards are untraceable and scammers can get the cash easily, which is why they are preferred in tax scams such as these.

 #4: Tax-Refund Fraud

A lot of scammers have been stealing people’s Social Security numbers and filing false claims for refunds based on such identities. This is also called as identity theft. So when you file your tax return legitimately, it is rejected by the IRS as someone has already filed a return in your name! This is a really common scam and you can only pray that it does not happen to you as it creates a messy situation for everyone.

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IRS Tax Scams to Watch Out for in 2017 – Part 1

IRS Tax scams have unfortunately become very common over the years. IRS scammers have been working extra hard in 2017 as well. We cast a look at some of the worst IRS scams or IRS Tax Scams that you should be wary of.

Generic IRS phone scam

In IRS phone scams, you will be sent a surprise tax bill by the scammer, purportedly by the IRS, which you have to pay immediately or you will be arrested. The scammers make use of telephonic spoofing or phishing so that their number comes up on the phone as from IRS.

They will also have access to the last 4 digits of your Social Security number, which they use to show themselves off as being legitimate. They send fraudulent IRS e-mails to support their claims and fake IRS badge numbers.

You will be asked to make the payment by wire or debit card to a particular account, which they say belongs to the IRS. Be aware, IRS never contacts you by phone asking for money. They only contact you by snail mail.

 Supposed Refund Scam

One of the greatest feelings anyone can have is to get a notice from the IRS that they would be soon getting a tax refund. That’s enough to thrill anyone. You would love to have a secret tax refund waiting for you somewhere.

An accountant Craig Smalley explains in NerdWallet about how this supposed refund scam works. He says that his client received an email that looked like it came from the IRS – informing them that they had received a $7,000 refund.

“All my client needed to do was enter his Social Security number and bank account information, and the IRS would directly deposit the supposed refund into his account. Yeah, right. In this case, I could tell this was a scam because the website didn’t have an irs.gov address.” Craig explains.

Fake Hostage Scam

This is another new type of scam which came to light in 2015 in Washington. A middle aged woman was trying to buy more than $2,400 in prepaid credit cards. When the Clerk asked why she was buying so much in prepaid cards, she said that she had received a call from someone in the IRS warning her about an unpaid tax bill.

What made it worse was that the man – who claimed to be from the IRS – said that he was holding her daughter hostage and would kill her in case she did not pay up.

This is a fraud on so many levels. IRS employees are not a bunch of gangsters like that. They don’t threaten you or ask for ransom. Fortunately, in this case the store clerk alerted the police, who found out that the woman’s daughter was safe. But sadly the scammer still got away.

We discuss more IRS tax scams in the Part 2 of this series. Meanwhile do sign up for our cloud-hosted tax preparation services such as Quicken Hosting, QuickBooks Enterprise Hosting, ProSerie Hosting, QuickBooks Hosting, Drake Tax Hosting or Lacerte Hosting.