Karla Dennis, the CFO/CEO of KDA Inc., specializes in tax planning and advises taxpayers to be aware of the IRS’ annual “dirty dozen” tax-related scams. This year’s list includes phishing scams, phone scams, identity theft, tax preparer fraud, and fake charities. Phishing scams involve fraudulent emails that appear to be from the IRS, trying to obtain personal information. Phone scams involve individuals claiming to be from the IRS demanding immediate payment over the phone, which is not a practice followed by the IRS.
Identity theft is a major concern during tax season, where scammers gather personal information to file tax returns on behalf of taxpayers and claim their refunds and credits. To protect against tax-related identity theft, individuals can obtain an Identity Protection PIN from the IRS, which changes annually and must be used by tax preparers when filing tax returns. Tax preparer fraud involves individuals posing as professionals and engaging in fraudulent schemes to take a portion of the taxpayer’s refund.
Another common tax scam involves fake charities that solicit donations for fake organizations. Taxpayers should verify the legitimacy of charities by checking the IRS website before making donations. To prevent falling victim to scams, individuals should take precautions such as obtaining an identity PIN, shredding documents with personal information, avoiding sharing private information over the phone, opting for direct deposit for tax refunds, and verifying the credentials of tax professionals. Communication between taxpayers and tax professionals is key to staying informed about tax refunds and potential scams.
Karla Dennis shares a cautionary tale of a client who experienced identity theft resulting in the IRS listing them as deceased due to their stolen Social Security number. To prevent scams like this, taxpayers should take steps to protect their personal information and be vigilant against potential scams. By being aware of common tax scams and taking proactive measures to secure personal information, taxpayers can safeguard their finances and avoid falling victim to fraud. It is important to consult with a licensed professional for advice concerning individual tax situations.
