Protect Your Finances: Common Tax Scams to Watch Out For

Phishing scams are attempts made to steal your money or identity by getting you to reveal personal information such as passwords, credit card numbers, bank account info, or your social security number. They typically happen when you receive a fraudulent email, text message, or message that appears to come from a legitimate source, such as a bank, government agency, or well-known company.

Phishing scams that appear to be from the IRS or California Franchise Tax Board (FTB) usually involve fake emails, phone calls, or websites. However, the IRS recently reported a new type of scam involving letters sent via mail from scammers posing as the IRS and capturing taxpayers’ attention with the mention of an unclaimed refund or unclaimed stimulus payment.

Identity theft occurs when someone uses your personal information to file a fraudulent tax return and claim a refund in your name. To add an extra layer of security, consider requesting an Identity Protection Personal Identification Number (IP PIN) from the IRS. An IP PIN is a six-digit number assigned to eligible taxpayers that helps prevent fraudulent tax filings. Read more about requesting an IP PIN, here.

1. Stay informed. To stay up to date with the most recent scams, visit the IRS website here and the California Franchise Tax Board (FTB) website here.
2. Be careful when sharing personal information. Safeguard your Social Security number and other sensitive data. Be cautious when sharing personal information, and regularly check your credit reports for suspicious activity.Remember, government agencies won’t initiate contact via email, text, phone, or social media for personal or financial information. The IRS or FTB will never demand immediate payment over the phone or email, or use threats of arrest, deportation, suspension of a driver’s license, or other legal actions if you don’t make immediate payments. If you receive a mailed notification and are unsure if it is really from the IRS or FTB, you can call to confirm or visit the IRS website here and the FTB website here.
3. Verify the person’s identity. Always verify the identity of anyone requesting personal or financial information, and be cautious of unsolicited communications. Take note of who contacted you and why. When in doubt, contact the FTB at 800-852-5711 or the IRS at 800-829-1040 to make sure.
4. Beware of ghost paid tax preparers. Anyone who prepares federal or California state tax returns for compensation is required to have a valid Preparer Tax Identification Number (PTIN) unless they meet an exception.A PTIN is issued by the IRS to paid tax return preparers. It serves as the tax return preparer’s identification number and must be placed in the paid preparer section of a tax return prepared for compensation (see image below). PTINs are issued to individuals, and Electronic Filing Identification Numbers are issued to individuals or firms. Most preparers need both.

   When searching for a tax preparer, beware of paid tax preparers who:

1. 1. Fail to provide their PTIN on a return.
   2. Accept cash-only payments without issuing receipts.
   3. Fabricate income to qualify clients for tax credits.
   4. Falsely inflate deductions to boost refunds.
   5. Divert refunds to their bank account instead of the taxpayer’s.
      

1. Report any fraudulent activity. If you encounter any tax-related scams or suspect fraudulent activity, it’s crucial to report them promptly to the appropriate authorities to protect yourself and others.
   

   IRS

   If you receive a phishing email or text message claiming to be from the IRS:  Do not open any attachments, click on any links, or reply. Forward any emails to phishing@irs.gov and any text messages to 202-552-1226. For any texts received, also include the phone number of the sender (standard text messaging rates apply). Delete the message and block the sender. If you receive a fraudulent call claiming to be from the IRS: Take note of the telephone number, the date/time, the number they directed you to call, and any employee name or badge number they might have provided. Email this information along with a brief description of the call to phishing@irs.gov with the subject line “IRS Phone Scam” or contact the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484.

   FTB

   Take note of any relevant information and call the FTB at (800) 852-5711, weekdays from 8 AM to 5 PM.

    

2. Report financial losses. If you have financial losses as a result of a scam related incident to the IRS, you can report your case to the Treasury Inspector General Administration (TIGTA) and file a complaint with the Federal Trade Commission (FTC) through their Complaint Assistant.
3. Report if your identity has been stolen. If your Social Security number has been compromised, and you know or suspect your identity has been stolen, visit the IRS website here and the FTB website here for more information. You can report tax-related identity theft to the FTB by phone at (916) 845-7088 weekdays from 7am-5pm. If you’ve previously reached out to the IRS without achieving a resolution, you can seek specialized assistance by contacting the IRS at 800-908-4490.
   
   Additional resources if you believe you’re a victim of identity theft:
   
   • • Federal Trade Commission (identitytheft.gov)
     • California Office of the Attorney General
     • Identity Theft Victim Checklist
4. Report preparer misconduct. Read more about how to submit a complaint to the IRS here and to the FTB here.