Beware of tax-related ID theft, other scams


Lori Swanson
Minnesota Attorney General

Whether you’re expecting a refund or owe money to Uncle Sam, tax season marks a good time to become familiar with tax-related identity theft and other scams. The U.S. Treasury Inspector General for Tax Administration estimates 1.6 million Americans were victims of such theft in the first six months of 2013, an increase from 1.2 million in all of 2012.

Don’t let this happen to you. Be on alert for these common scams:

• Tax-Related Identify Theft. Under this scam, identity thieves steal taxpayers’ personal information — such as their name and Social Security number — and use it to file fraudulent tax returns to receive refunds. Taxpayers may not find out they’re victims until the IRS rejects their tax returns due to the previously filed fraudulent returns.
Take Dave and Julie, who filed a joint tax return at the filing deadline. Several weeks later, they received a letter from the IRS notifying them that their return was rejected because Julie had already filed a return, using an Arizona address, and received a $10,000 refund. Julie, however, had never been to Arizona and wasn’t owed a refund.

• “Phishing.” Scam artists often impersonate the IRS to lure people into disclosing personal and financial information that can be used for theft and identity theft.
While e-mails are most common, consumers also report receiving calls from fraudsters who claim to be tax officials and ask for personal and financial information.
Scam artists also create phony websites designed to look like the website of a well-known company or government agency to trick consumers into believing they are dealing with an entity they can trust.

• Intimidation Scams. Scam artists may claim they’re calling from the IRS or Minnesota Department of Revenue to intimidate people into making payments on supposed back taxes. They threaten arrest, lawsuits and imprisonment, and demand victims make immediate and sometimes unconventional payments.
For example, Sarah received a call from someone who said he was an IRS agent and claimed she owed $30,000 in back taxes. The caller said he would send police to arrest her and have her thrown in jail if she did not wire him $6,000 to settle the debt. Even after Sarah wisely disputed the debt and hung up, the man called her for hours, leaving several threatening messages.

• Preparer Fraud. Many taxpayers use tax professionals to help them prepare and file their tax returns. Most preparers do great work, but some bad actors promise guaranteed refunds and then charge exorbitant fees or “skim” money from their client’s refunds.

• Tax Relief Companies. In some cases, tax relief companies provide anything but relief. Unscrupulous operators use deceptive marketing tactics and charge hefty up-front fees, but then fail to deliver the promised help.
Consider Robert, who hired a tax relief company that promised to help him pay off his back taxes. After six months and more than $1,000 in fees, Robert still hadn’t heard from the company about how it planned to help him resolve the debt.

• Refund Anticipation Loans and Checks. Although these loans sound like a slick way to get your refund quickly, you often get less than you deserve, as companies charge high interest rates and costly fees. In most cases, the IRS and the Minnesota Department of Revenue can deposit taxpayers’ refunds directly into their bank account or onto a prepaid debit card within three weeks -- without any added fees.

• Sham Charities. Sham charities — often created after a natural disaster — prey on the generosity of citizens. These scam artists solicit cash donation and goods, but then provide little or no charitable assistance.
Sham charities also sometimes falsely claim that donations are tax deductible. Be aware that only donations made to IRS-qualified charities are tax deductible.

How to avoid tax scams

Never provide personal or financial information to people you don’t know over the phone or through e-mail and text messages.

Also, be alert for phony websites created by scam artists attempting to steal information. The IRS and Minnesota Department of Revenue do not request personal or financial information from taxpayers by e-mail or text message, and do so by phone only in very rare instances.

If in doubt, don’t give it out. Instead, contact these agencies directly using the contact information listed on their websites or in the tax booklets.

Check your credit report at least once a year and report inaccuracies. Many people first learn they are victims of identity theft by discovering inaccuracies on their credit report. Minnesota residents can obtain a free credit report every twelve months from the three major credit bureaus by calling 1-877-322-8228, online at, or by writing to: Annual Credit Report Request Service, P.O. Box 10528, Atlanta, GA 30348-5281.

If you hire a tax professional to prepare your return, ask for his or her credentials up-front. Be wary of preparers who promise guaranteed refunds or charge a fee based on a percentage of your refund. Always make sure you review your return and ask your preparer questions about entries you don’t understand before signing it. Never sign a blank form. You are responsible for all the information on your tax returns regardless of whether someone else prepared it.


Rate this article: 
No votes yet
Article category: 
Comment Here