Phone calls from criminals impersonating an Internal Revenue Service agent are the most common and serious tax scams reported by the IRS. Taxpayers should be aware the IRS never calls demanding payment or to ask for a credit card; the agency will first make contact by mail.
Phishing involves a taxpayer receiving an unsolicited email trying to obtain financial or personal information. These phony emails often look very official with an IRS logo. Tax-related identity theft occurs when a stolen a Social Security number is used to file a tax return for a refund. Fraudulent tax preparation services prey on innocent taxpayers with promises of large refunds. Be sure to investigate the credentials of the tax preparer and make sure the preparer will be available after April 15. Avoid tax preparers who base their fees on a percentage of the refund or promise a large refund.
Other common tax scams include inflated refund claims, fake charities, filing false documents to hide income, abusive tax shelters, falsifying income to claim tax credits, and excessive claims for fuel tax credits.
For additional information on tax scams, click here:
Teaching Suggestions
- Have students talk with others to obtain information about actions taken to file their taxes.
- Have students prepare a list of warning signs of tax scams.
Discussion Questions
- What attitudes and behaviors can result in a person being a victim of a tax scam?
- What actions can taxpayers take to avoid being a victim of a tax scam?
Melissa Hart
Focus on Personal Finance, 7e 