How to avoid becoming a victim of fraud this tax season
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POCATELLO — Officials are urging people to exercise due diligence this tax season to avoid becoming a victim.
Johnathan Towle, Assistant Special Agent in Charge, IRS Criminal Investigation, at the Denver field office for the Internal Revenue Service, says the first thing to be wary of is fraudulent tax preparers. If they’re offering a higher return than the competition, it’s a red flag.
“There’s no secret sauce for getting a refund. The law is the law, so you should pretty much be able to get the same refund from preparer to preparer,” Towle said.
If there’s false information on your return that gives you a larger refund, Towle says it’s a fraudulent preparer. Even if your tax preparer made false claims without your knowledge, you’re still responsible for paying back the money as well as the interest. That’s why you should still have some understanding of what they’re putting on your return, Towle says.
People who make false claims on their taxes or have false claims filed on their behalf may receive a temporary gain, but they’ll eventually be discovered and face consequences.
“I guarantee you will ultimately be caught. That deduction will be removed and you will end up owing money back to the IRS with interest in penalties,” Towle said.
While there are enrolled agents, certified public accountants and tax attorneys who are qualified to prepare a tax return, Towle says anybody can legally take up the practice.
“Do your due diligence and make sure you’re finding a preparer (who’s reputable) and doesn’t play any games,” Towle said.
For those who have a well-established tax preparer, tax crimes can still happen.
Over the last five years, many people have probably heard about situations where the IRS supposedly calls a taxpayer and tells them they’ll be arrested if they don’t pay or send information within a certain amount of time. Sometimes this message comes as an email with an official looking IRS header that’s riddled with typos.
The IRS doesn’t operate like this.
“Criminal Investigation is the section of the IRS that I work for. We’re the only law enforcement section of the IRS and we don’t just send you a text message 15 minutes before arresting you,” Towle said.
These schemes have gotten more sophisticated over time.
Towle finds scammers who steal contact lists off the servers of a local CPA firm. They can send emails to clients that say, “It’s tax time, time to file. We’ve been doing your returns for 10 years. Here’s a link, start sending your tax stuff.”
“Without any sort of second look, people start sending it and then all of a sudden, they now gave the fraudster all their tax information so they can file a tax return on their behalf and steal the refund,” Towle said.
Once a person hands over their tax information to what they think is their CPA, their return will be filed that night.
“It happens that quick,” Towle said.
If you happen to become a victim, don’t feel embarrassed.
“These scams are sophisticated and they trap a lot of people,” Towle said
For those who discover they’ve been a victim of identity theft, they’ll go to file their taxes and find that they’ve already been filed. It’s necessary to act quickly to reverse it. Fill out a form to report the theft and file a paper return to replace the fraudulent one.
At the end of the process, you’ll see your return like nothing happened, but it will take time for the IRS to sort it out.
The best way to avoid tax fraud and identity theft, according to Towle, is to be vigilant with your information and your research.
“The best way to prevent it is to just make sure you’re safe with your data,” Towle said.