Avoiding 'ghost preparers' and other tax scams as the April 15 federal filing deadline approaches: a guide.

Avoiding 'ghost preparers' and other tax scams as the April 15 federal filing deadline approaches: a guide.
Avoiding 'ghost preparers' and other tax scams as the April 15 federal filing deadline approaches: a guide.
  • In 2020, the IRS received 294,138 complaints of reported identity theft, the second highest number ever, and its criminal investigation agents identified over $5.5 billion in tax fraud.
  • Be cautious if you receive an email, text, or call from an unknown company claiming to assess your potential tax savings or increase your refund.
  • The IRS states that it will never communicate with taxpayers about a bill or refund through email, text, or social media.

With the April 15 federal tax deadline approaching, taxpayers have only two weeks left to submit their 2023 individual tax return or request an extension. However, this presents scammers with an opportunity to attempt to steal filers' personal and financial information.

In 2020, the IRS received 294,138 complaints of reported identity theft, the second highest number in its history. Additionally, the agency's criminal investigation agents identified over $5.5 billion in tax fraud.

The IRS has processed 79.2 million federal returns, which is nearly half of the 167 million individual tax returns it anticipates receiving this season, as stated by IRS spokesman Eric Smith in a March 22 report.

Fraud experts advise taxpayers to take precautions if they have not yet submitted their return or payment.

"Electronically file your tax returns or payments or visit the post office directly," advised Jennifer Hessing, fraud analytics director at Wells Fargo. "External mailboxes are at risk of theft as scammers target personal information or checks being sent out for tax payments."

Here are three common tax scams and ways to avoid them:

Beware of unsolicited emails, texts, phone calls

Be cautious if you receive an email, text, or call from an unknown person or company claiming to assess your potential tax savings or increase your refund.

Steve Earls, head of consumer data security at IDShield, stated, "We are committed to providing you with your [refund] promptly and effortlessly. Simply provide us with the necessary details, and we will make it happen." However, if you have doubts about our trustworthiness, you can call our customer service at any time. Be aware that our call centers are part of a larger conglomerate.

Scammers pretending to be legitimate tax or financial organizations may ask for personal and financial information through calls, emails, or text messages, which can result in identity theft.

Third-party offers to set up your IRS account

You can set up an online account at IRS.gov to fill out and process your return more quickly by providing your Social Security number or Individual Taxpayer Identification Number and a photo ID.

The fraudster can use the stolen personal information to file fraudulent tax returns, open credit card accounts, or obtain loans.

'Ghost tax preparers'

A "ghost tax preparer" may prepare your return but neglect to sign the document, provide their address or tax ID number. They may assume you'll sign a return without verifying this information and have already captured your personal and financial information.

A scam can be easily detected when a taxpayer employs someone to prepare their return but fails to include or incorrectly states "self-prepared" on the paid preparer section of the return, according to Miklos Ringbauer, a certified public accountant based in Los Angeles.

"A red flag for a client when reviewing their return should be the first and utmost," he said. "A taxpayer should never sign their returns without reviewing them."

CNBC's Stephanie Dhue contributed reporting.

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by Sharon Epperson

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