Beware of These 5 Tax-Season Scams

by Lisa Severson, USAA 

As the April 15 tax deadline draws near, swindlers are thinking of the best ways to defraud you of your hard-earned cash. Be vigilant and don't fall for any tax-season scams. Here are five common ones:

1. The Early Refund Promise Scam

Phishing is the most common ruse scammers use to dupe taxpayers. Phishing uses email or text messages to trick you into providing your Social Security number, bank account numbers and passwords.

A phishing email or text might provide a link to a website that looks official but isn't. The email may offer a bigger refund for a quick response, or claim that your tax return is missing important information, such as your W2 wage and tax statement from your employer. Some scams even threaten penalties or criminal prosecution if you don't act.

Don't fall for this con, and don't click any attachments or links from any suspicious email or texts. The IRS will never send unsolicited messages to taxpayers, and it doesn't ask for passwords, PINs or other personal information. Forward any such message to This email address is being protected from spambots. You need JavaScript enabled to view it., and then delete it immediately. 

"Through phishing, the bad guys get your personal info and passwords, which could allow them to steal your identity and take over your account," cautions J.J. Montanaro, a CERTIFIED FINANCIAL PLANNER™ practitioner at USAA. "There's a lot of confidential data gathered during the tax filing process, and that can pose a substantial risk to your finances." 

2. The Unscrupulous Tax Preparer 

If you pay someone to prepare your tax return, do your homework and choose the person wisely. "You'll be sharing very personal information with your tax preparer, so you don't want to make your choice without some solid research," Montanaro says. 

A questionable tax preparer might take some of your refund, overcharge you or find other sneaky ways to steal your cash. Trusted resources — such as friends, family, and the Better Business Bureau and other consumer protection-oriented websites with customer ratings — can help you find a reputable tax preparer. 

Ask your tax preparer to detail all fees in advance, preferably in writing. A shady tax preparer might charge a high fee and then withhold your tax return until you pay it. Make sure you read and understand all forms from your tax preparer — before you sign any documents or pay any fees. All tax preparers are required to have a preparer tax identification number, and they must be capable of filing your tax return electronically. 

Keep in mind that each taxpayer is legally responsible for his or her tax return, even if it was prepared by someone else. Check the Internal Revenue Service's tips for choosing a trustworthy tax preparer

3. The Quick Debt Eraser Scam 

The possibility of a cheap, quick fix without financial ramifications is attractive but unlikely. Scam artists prey on vulnerable taxpayers, such as homeowners who have been affected by the housing crisis and find themselves upside down on their mortgage. The tricks, usually sent via phishing, are varied and tireless: "Remove IRS Tax Penalties." "Cut Your Debt Today." "Pay Only 1% of your Tax Bill." All attractive, all frauds.  

Ignore these scams. Anti-malware software set to catch phishing attacks can help block these messages, keeping them from your inbox. If taxes are specifically mentioned in the scam, legal ramifications exist for the perpetrators. 

"Remember the old saying, 'If it sounds too good to be true, it probably is,'" says Montanaro. "No matter what the offer, don't give up your personal information." 

4. The Phony Charity

The sad reality is that scammers will use every natural disaster and national tragedy to drum up fast cash for their phony charities. During tax season, scammers will claim that a donation you make now will earn you a tax deduction for the previous year.

"Charitable deductions are taken for the tax year in which they are made," explains Montanaro. "If someone is asking you to make a donation and promising to give you a tax deduction for the previous year's tax return, that's an indicator you've got a problem."

Don't donate to door-to-door collectors or over the phone. You can do the most good by initiating donations yourself via a Trusteer Rapport-approved charity website. 

5. Offshore Tax Shelters That Don't Exist

Citing allegations of wiretapping and data collection by the National Security Agency, scam artists are trying to lure Americans into transferring money to offshore accounts by saying the government is "spying" on them. They claim that offshore accounts are tax shelters, safe from prying eyes. Send a check, and the money certainly will vanish.

Even if these offshore accounts were real, it's still illegal to keep an undeclared account in order to avoid paying taxes. Offshore accounts are legal, but they must be disclosed to the IRS during tax time. Failing to do so can lead to criminal prosecution. The IRS' Offshore Voluntary Disclosure Program, however, offers taxpayers who admit to maintaining offshore accounts the opportunity to get current with their tax returns.

Don't respond to email requests to open an offshore account. If you have one already, make sure it's properly declared and you pay any related taxes.

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