The season for filing 2023 taxes begins January 29, and while some Texas residents are planning on submitting their own returns, others are reaching out to reputable tax preparers for assistance. With roughly three months remaining until the filing deadline of April 15 for general tax returns, Better Business Bureau reminds residents to be wary of con artists and unethical businesses who claim to specialize in tax preparation. Additionally, BBB reminds businesses and consumers to be aware of an increase in IRS impostors attempting to contact tax filers through email, text, social media, or other methods to steal personally identifiable information (PII).
IRS Impostor and Phishing Scams
Impostor scams remain one of the most common types of fraud reported to the FTC by Texas residents, with over 33,000 reports in the first three quarters of 2023. Across the U.S., impostor scams account for $2 billion in losses, surpassing losses to the next three most frequently reported types of fraud combined. IRS impostors target tax filers and tax preparation businesses, often claiming the recipient must take immediate action or confirm account details.
IRS impostor scams are carried out through unsolicited phone calls and emails, including students, faculty and staff at educational institutions with a ‘.edu’ email address. Emails often display the IRS logo and encourage recipients to follow a link to verify their tax refund payment by entering PII, such as their SSN, date of birth and current address, on a lookalike website. The website is a phishing scam, and the information provided could lead to identity theft or Stolen Identity Refund Fraud.
Remember, the IRS will never:
- Demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer.
- Threaten to immediately contact local police or other law enforcement to have the taxpayer arrested for not paying.
- Demand that taxes be paid without allowing taxpayers to appeal the amount owed.
- Unexpectedly call about a tax refund.
- Send emails about your tax refund or sensitive personal information.
- Initiate contact with taxpayers by email, text message or social media to request personal or financial information.
Ghost Tax Preparer Scams
A ghost preparer is an individual who advertises themselves as a professional tax preparer, often guaranteeing a significant tax return when using their services. However, the preparer either refuses or conveniently “forgets” to sign the return they created on behalf of a client.
By federal law, anyone paid to prepare, or assists in preparing, a federal tax return must have a valid Preparer Tax Identification Number (PTIN). Tax preparers must sign and include their PTIN on any returns they create on behalf of a paying customer. Businesses or individuals refusing to sign a return is a red flag that they may be fraudulent, leaving the consumer to deal with the IRS in the aftermath of an illegitimate or incorrect filing. Filing a valid, accurate tax return is ultimately the taxpayer’s responsibility, emphasizing the importance of choosing a credible tax preparation professional.
It is important to carefully analyze a chosen tax preparation business due to the PII provided, such as SSN, bank account information, home address and financial assets. BBB recommends spending the time to research tax preparation professionals to determine their credibility and legitimacy. The IRS provides a directory service that lists preparers in a searchable area who currently hold professional credentials recognized by the agency. Additionally, use available resources, such as BBB.org, to search for accredited tax preparation businesses.
Individuals impacted by tax preparer misconduct can file a report with the IRS at IRS.gov/tax-professionals and are encouraged to file an official complaint on the business’s BBB Business Profile, as well as submit a report to BBB Scam Tracker.
For more information about how to avoid tax scams and choose the right tax preparer, visit BBB.org/TaxTips.
