6 Tax Scams You Need to Watch Out for in 2020

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IRS scammers are working overtime this season in an attempt to steal your identity and money.

Here are some common scams you need to be on the lookout for!

6 Tax Scams That Wreak Havoc on Americans Every Year

1. Tax-Refund Fraud

During the last few years, crooks have been stealing people’s Social Security numbers and then filing false returns as though they were those people.

The crooks typically claim a low income with high deductions and they file electronically. When you go to legitimately file your return, it’s rejected by the IRS because somebody else already filed as you.

The whole mess typically takes about 10-14 months to straighten out if you’re on the receiving end of the scam.

But it turns out there’s an easy solution: You can get an Identity Protection PIN from the IRS before you file your taxes.

The IP PIN is a six-digit number that must be used on a tax return, in addition to a Social Security number, to verify the identity of a taxpayer.  Once you opt into the program you can’t opt out. If you qualify, you will get a new PIN each year through the mail.

Visit IRS.gov/GetanIPPIN to opt in.

For 2020, the IP PIN is only available to residents of the following states:

  • Arizona
  • California
  • Colorado
  • Connecticut
  • Delaware
  • District of Columbia
  • Florida
  • Georgia
  • Illinois
  • Maryland
  • Michigan
  • Nevada
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • Pennsylvania
  • Rhode Island
  • Texas
  • Washington

Meanwhile, here’s what to do if someone files a false return in your name.

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2. W-2 Email Phishing Scam

Unfortunately, there’s a new twist on tax return identity theft. The IRS says crooks have been running a successful W-2 email phishing scam operation that has tricked major companies into turning over copies of W-2 forms for all employees.

This is actually a CEO impostor scam, where a criminal or criminals pretend to be top company brass and ask payroll or human resources for sensitive W-2 data.

The criminals then use that info to file bogus tax returns or sell the breached data online to other criminals, according to the latest IRS warning.

3. Don’t Let Your Tax Preparer ‘Ghost’ You

The IRS warns of a new scam that involves tax preparers who don’t sign off when they prepare your tax return for a fee.

Any tax preparer who fails to sign and include their valid Preparer Tax is violating the law. If they fail to do so, they “may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund,” according to the IRS.

Other signs you’re being “ghosted” include:

  • Asking for cash payment and not providing a receipt
  • Falsifying income info on your return to get tax credits
  • Making up fake deductions to boost the size of your refund
  • Sending clients’ direct deposit refunds to their own bank accounts

4. Generic IRS Phone Scam

The premise here is that you have a surprise tax bill you need to pay immediately to the IRS or you’ll be arrested. The scammers use phone spoofing to make their number come up on your phone as “IRS.” Because they already may have the last four digits of your Social Security number, that gives them a further air of legitimacy.

Here are some of their other tactics to watch out for:

  • They use common names and fake IRS badge numbers
  • They send bogus IRS emails to support their scam
  • They call a second time claiming to be the police or Department of Motor Vehicles, and the caller ID again supports their claim

You’re told to submit payment either by wire or by prepaid debit card. Know this: The IRS will never contact you by phone asking for money. They communicate exclusively through snail mail.

RELATED: Warning — The IRS Phone Scam Is Back and More Sophisticated Than Ever

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5. Fake Hostage Scam

A few years back, a supermarket clerk in Washington was able to stop a woman from losing thousands in a scam.

MyEdmondsNews.com reports a 54-year-old woman approached a Safeway clerk trying to buy $2,400 in prepaid cards. But the clerk smelled something fishy. Upon questioning, the woman revealed that she’d received a call from a man who claimed to be with the IRS contacting her about an unpaid tax bill.

Worse yet, the man claimed to be holding the woman’s daughter hostage and threatened to kill her if she didn’t pay up.

The clerk became suspicious and contacted the police, who were able to determine the woman’s daughter was safe and that this was all just a horrible scam.

First off, kudos to this employee who took time to more than serve this customer and save the woman’s money. Second, kudos to the police for stepping in so quickly. But as always, the criminal was not caught.

6. IRS iTunes Scam

USAToday reported a 20-year-old college student was duped by someone claiming to represent the IRS into putting $500 on three separate iTunes cards and $262 on a fourth, all using her debit card.

Why would the student do this? Because she was threatened with arrest.

The scammers call persistently and also may spoof 911 calling your phone, as well, according to the report.

With the iTunes gift card scam,  the thieves ask you to put money on the card and then read them the 16-digit code off the back. That allows them to quickly access the cash in a way that’s untraceable in most cases.

If you have questions regarding tax scams or any other financial or consumer matter, consider calling our free Consumer Action Center. Volunteers are here to help you Monday-Thursday 10am -7pm ET and Friday 10am-4pm ET!

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