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Small Business Tax Scams

Watch out for scammers and read our tips on how to avoid tax fraud.

Scam Watch February 10, 2017

 

Perhaps no time of the year brings the cyber-thieves out quite like tax season. These crooks come prowling for your personal information, and if you let them, they’ll take everything from you. Fortunately, it’s possible to defend against them. Here are some tips on how to avoid the scummiest small business tax scams.

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The Unexpected Refund

You get an email, phone call, text message, or letter telling you that you that the IRS owes you a tax refund. The message looks official. If it’s a phone call, the caller ID might show “IRS” because the scammer is using phone spoofing tools.

To get your refund, you have to give the scammer some of your most sensitive personal data, like your bank account information and Social Security number. They use this information to ruin your life.

Their primary goal is to get enough information from you to drain your accounts. Some of the time, these people are calling you from another country. It’s very low risk for them.  Even if you catch them in the act, there’s little chance anyone will be able to trace it and find them.

Speaking of refunds, sometimes these crooks will use your personal information to file a return in your name and then pocket your refund for themselves. You can stay a step ahead of this scam by getting an identity protection PIN (IP PIN).

 

The Unveiled Threat

In this one, the scammer poses as the IRS, but instead of tempting you with a refund, they try to scare you into divulging your information. The scammer will tell you that you owe a certain amount of money to the IRS. For added legitimacy, he might even rattle off some of your personal information. Don’t be fooled.

If you send any money, you’ll never see it again.

According to irs.gov, here’s a list of what the IRS will not do (so if someone calls you and does one or more of these, then they are not from the IRS):

  • Request immediate payment over the phone
  • Not let you appeal the amount you owe
  • Make you pay your penalty through a particular payment option (e.g., prepaid debit card)
  • Inquire about your debit card or credit card numbers over the phone
  • Threaten to have you arrested if you do not pay your penalty

The scammers can be incredibly intimidating. It’s up to you to keep your bearings and know when to hang up.

If someone calls you and claims to be from the IRS, you should end the call immediately and reach out to the IRS directly.

 

The Unaffordable Care Act

Everyone knows you need health care or you’ll get penalized on your taxes. So, when a “tax preparer” calls you up and says you’re in trouble for not having health insurance, you might just believe them.

The scam happens when they aren’t authorized to accept the penalty money. And most of the time you probably don’t owe a penalty in the first place.

Once again, the best way to deal with this situation is to hang up the phone. If you already have a tax professional, you can ask them to take care of it. He or she should be able to steer you away from the scammers. If you are filing your taxes, then you’ll need to be careful.

Our list of tax scams certainly isn’t comprehensive. So stay vigilant and keep an eye out for those scammers.

 

Getting Started on the Right Foot

Fraud isn’t the only annoying thing about taxes. If you don’t make the right preparations, the entire process can be very frustrating. As you work toward your filing date, keep these prep tips in mind:

  • Decide right now when to set your personal due date. (By the way, it shouldn’t be the day they are legally due.)
  • Figure out if you want to have a professional do it. Last year we made our case for why you should never file your small business taxes on your own. We stand by that.
  • Be ready for an audit even if you don’t get one. You should file your taxes like you’re planning on the IRS knocking on your door the next day to look at the books.

Most importantly, get started now. A lot of these scams require the victim to be a little out of touch with their current tax situation. If you’ve already filed and got your refund, then you won’t fall for half of the tax scams out there.

 

Final Thoughts

Tax season is stressful, but less so when you keep your finances separate from fraud. Hopefully, these tips will help keep your personal information safe.

If you think the scammers already got to you, then reach out to the IRS immediately. You can call them at 800-829-1040. You can also stay up to date on the latest tax scams and consumer alerts here: https://www.irs.gov/uac/tax-scams-consumer-alerts.

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