As tax season approaches, authorities would like to remind everyone to be particularly mindful of an increase in fraudulent activities targeting taxpayers. Unfortunately, scammers are using various tactics to take advantage of individuals during this time, including a noteworthy rise in schemes involving uncredentialed tax preparers, often referred to as “ghost preparers.”
The Rise of ‘Ghost Preparers’
The Internal Revenue Service (IRS) has observed an increase in “ghost preparers”—individuals who present themselves as tax professionals but do not possess the appropriate credentials. These preparers may promise substantial refunds and often charge fees based on the refund amount. However, they typically do not sign the tax return or provide a Preparer Tax Identification Number (PTIN), which can leave taxpayers at risk of errors, audits, and potential penalties.
Common Scams and Tactics
Scammers utilize various methods to mislead taxpayers, including:
Impersonation Calls: Some fraudsters impersonate IRS agents, claiming there are issues with tax returns and demanding immediate payment or personal information. The IRS would like to remind everyone that it initiates contact through official letters rather than phone calls, emails, or texts.
Phishing Emails and Texts: Unsolicited messages may prompt recipients to click on links or provide personal details, which can result in identity theft or financial loss.
Promises of Large Refunds: Certain preparers may guarantee unusually large refunds, often by fabricating deductions or credits. Taxpayers are legally responsible for the accuracy of their returns and may face repayment with interest and penalties if any inaccuracies are discovered.
Protective Measures
To help protect against these scams, taxpayers are encouraged to:
Verify Credentials: Please ensure that tax preparers hold a valid PTIN and possess the appropriate qualifications. The Better Business Bureau (BBB) suggests researching preparers’ reputations and being cautious of those who base fees on refund sizes.
File Early: Submitting tax returns in a timely manner can help reduce the opportunity for scammers to file fraudulent returns using stolen information.
Be Skeptical of Unsolicited Communications: It is wise to treat unexpected calls, emails, or texts with caution, particularly those requesting personal or financial information. Official agencies typically communicate through formal letters.
Secure Personal Information: Protect sensitive data by using reputable tax preparation services and secure, encrypted websites for online filings.
Reporting Suspected Fraud
If you suspect that you have encountered a tax scam or fraudulent preparer, please consider reporting the incident to the IRS and the Federal Trade Commission (FTC). Timely reporting can assist in minimizing potential damage and support authorities in their efforts against these fraudulent activities.
By staying vigilant and informed, taxpayers can navigate the filing season safely and protect their personal and financial information from potential threats.
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