Lori Swanson

Minnesota Attorney General

Whether you’re expecting a refund or owe money to Uncle Sam, the arrival of tax season marks a good time to become familiar with tax-related identity theft and other tax scams.  The U.S. Treasury Inspector General for Tax Administration estimates that 1.6 million Americans were victims of taxrelated identity theft and refund scams in the first six months of 2013, an increase from 1.2 million in all of 2012.  Don’t let this happen to you!  Be on alert for these common scams:

• Tax-Related Identify Theft.  Under this scam, identity thieves steal taxpayers’ personal information—such as their name and social security number—and use it to file fraudulent tax returns to receive refunds.  In most cases, taxpayers don’t learn they are victims until after the IRS rejects their tax return due to the previously filed fraudulent return.

Take, for instance, “Dave” and “Julie,” who filed their joint tax return at the filing deadline.  Several weeks later, they received a letter from the IRS notifying them that their return was rejected because Julie had already filed a return, using an Arizona address, and received a $10,000 refund.  Julie, however, had never been to Arizona and wasn’t owed a refund.

• “Phishing.”  Scam artists often impersonate the IRS to lure people into disclosing personal and financial information that can be used to commit the crimes of theft and identity theft.  While emails are the most common “bait,” consumers also report receiving calls from fraudsters who claim to be tax officials and instruct them to provide personal and financial information.  Scam artists also create phony websites designed to look like the website of a wellknown company or government agency to trick consumers into believing they are dealing with an entity they can trust.

• Intimidation Scams.  Scam artists may impersonate the IRS or Minnesota Department of Revenue to intimidate people into making payments on supposed back taxes.  The scam artists often threaten people with arrest, lawsuits and imprisonment, and demand they make immediate and sometimes unconventional payments.  These criminals will say anything to try to get people to send them money, and may call over and over in an attempt to wear down potential victims.

For example, “Sarah” received a call from an individual who identified himself as an IRS agent and claimed she owed $30,000 in back taxes.  The individual told her that he would send the police to arrest her and have her thrown in jail if she did not wire him $6,000 to settle the debt.  When Sarah disputed the debt and hung up, the individual relentlessly called her for hours, leaving several threatening messages.

• Preparer Fraud.  Many taxpayers use tax professionals to help them prepare and file their tax returns.  Most preparers do great work, but some bad actors promise guaranteed refunds and then charge exorbitant fees or “skim” money from their client’s refunds.

• Tax Relief Companies.  In some cases, tax relief companies provide anything but relief.  The most unscrupulous operators use deceptive marketing tactics and charge hefty upfront fees, but then fail to deliver the promised help.  To make matters worse, these companies sometimes make mistakes that end up costing taxpayers even more money.

Consider “Robert,” who hired a tax relief company that promised to help him pay off his back taxes.  After six months and more than a thousand dollars in fees, Robert still hadn’t heard from the company about how it planned to help him resolve the debt.

• Refund Anticipation Loans and Checks.  Although these loans sound like a slick way to get your refund quickly, they typically come with high interest rates and costly fees.  In most cases, the IRS and the Minnesota Department of Revenue can deposit taxpayers’ refunds directly into their bank account or onto a prepaid debit card within three weeks without any added fees.

• Sham Charities. Sham charities—oftentimes created after a natural disaster—prey on the generosity of citizens.  These scam artists solicit cash donation and goods, but then provide little or no charitable assistance.  Sham charities also sometimes falsely claim that donations are tax deductible.  Be aware that only donations made to IRS qualified charities are tax deductible.

Advice for avoiding tax scams

Remember never to provide personal or financial information to unknown individuals over the phone or through email and text messages.  Also, be alert for phony websites created by scam artists attempting to steal information.  The IRS and Minnesota Department of Revenue do not request personal or financial information from taxpayers by email or text message, and do so by phone only in very rare instances.  If in doubt, don’t give it out.  Instead, contact these agencies directly using the contact information listed on their websites or in the tax booklets.

Check your credit report at least once a year and report inaccuracies.  Many people first learn they are victims of identity theft by discovering inaccuracies on their credit report.