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Beware of Tax Scams

February 16, 2017

As we settle further into tax season, it’s important to address the matter of security. During last year alone, the Georgia Department of Revenue (DOR) blocked over $98,000,000 in fraud! They’re continually working to catch fraudulent preparers and scam artists to protect the Georgia taxpayers.

Even still, we’re best protected when we are aware of fraudulent practices and know how to avoid them.

The IRS’s “Dirty Dozen”

For the past few years, the IRS has published a list of twelve scams that taxpayers should watch out for. Start your tax scam research with these few items on their list:

Falsely Inflating Refund Claims

Watch out for this one if you hire a professional to prepare your taxes. Preparers may claim that you will receive an extremely large refund, or that you can now claim credits or benefits that you couldn’t in previous years. This type of scam artist will often target people who may not have a filing requirement: those with low-income, those who are elderly and non-English speakers. If you claim phony rebates, benefits or tax credits, or you file your taxes with other various false information, you may face significant penalties or imprisonment.

How do you avoid this scam? Choose your tax preparer wisely. An honest tax preparer will provide you with a copy of the tax return, and they won’t deduct a large “fee” before paying you, as some scammers will. In Georgia, third party filers must register with the Georgia Department of Revenue. Third party filers are tax preparers and professionals who file returns or make payments on a taxpayer’s behalf, or access a taxpayer’s account information.

In the end, you’re held responsible for the information provided on your tax return, even if someone else put it together for you. If you choose to hire a tax preparer, make sure it’s someone you can trust.

Identity Theft

Tax-related identity theft — when someone uses your stolen Social Security number or Individual Taxpayer Identification Number to file a return — is a primary concern every tax season. Thanks to new safeguards, reports of stolen identities on federal tax returns reduced by over 50% in 2016. The IRS continues to fight the remaining number with further security safeguards applied this year.

With our government agencies doing all they can to protect our identities, there are also steps we can take to maintain security.

"We're calling on taxpayers to do everything they can to protect their private information because criminals continue looking for new and more sophisticated ways of beating the system.”
— IRS Commissioner John Koskinen

Follow these tips to protect your personal information:

  • Always use security software with firewall and anti-virus protections and allow it to update automatically.
  • Encrypt sensitive files, like tax records.
  • Use strong passwords.
  • Recognize and avoid phishing emails, threatening phone calls and texts. Don’t click on links or download attachments from unknown or suspicious email addresses.
  • Store your Social Security card and tax records in a secure location.

Learn more about how to avoid tax-related identity theft and what to do if you’re a victim from the IRS’s Taxpayer Guide to Identity Theft.

Fake Charities

Another popular fraud for scam artists is to impersonate a charitable organization. The fake charities will collect money and personal information from people who may be expecting to get a tax deduction for their donations.

To make sure the charity you’ve chosen is legitimate, follow these tips:

  • Beware of charities with names and websites that are similar to well-known organizations.
  • If you’re questioning the legitimacy of an organization, ask for their Employer Identification Number (EIN, also called federal tax identification numbers). Then use the EIN to see if they’re listed for tax exemption with the IRS.
  • See if the charity has registered with the Georgia Secretary of State’s office.
  • Don’t give personal financial information — like your Social Security number or any passwords — to anyone asking for money.
  • Don’t give your credit card, debit card or bank information to solicitors. Always research organizations before making a contribution.
  • Don’t give with cash. If you choose to donate, use checks, cards or another way that provides documentation.

Get more tips on verifying the legitimacy of charitable organizations from the Georgia Department of Law’s Consumer Ed and learn more about tax exempt organizations from DOR.

Security Requires Patience

Last year, Georgia DOR saw unprecedented levels of tax fraud attempts. To fight fraud, the Department has implemented a sophisticated Fraud Management System. Since the system relies on gathering verification information ahead of time, taxpayers may experience greater delays in receiving their tax returns. This year, DOR has asked that we allow 90 business days for them to process individual tax returns.

Always remember that you can check the status of your refund online or by calling 877-GADOR11 (877-423-6711).

Remember, your tax forms are due on Tuesday, April 18.

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About the Author

Rachel Hart is the User Interface designer for GeorgiaGov. She visually organizes information and writes blogs on a variety of government-related topics.