Tax season is one of the busiest seasons for fraudsters and criminals who prey on the public's desire to remain in good standing with the Internal Revenue Service. Despite the efforts being made by both the IRS and savvy taxpayers, tax scams will still occur. So, victims must take a proactive role in clearing their names.
If you become the victim of a tax scam or a tax fraud, the best way to clear your name is to report the scams and understand the IRS's mechanisms to resolve these issues.
Report suspected tax scams
The first step in clearing your name with the IRS is recognizing if you are the victim of a tax scam and understanding the nature of the fraud that has occurred. The top tax scams fall loosely into three main categories: Internet-based scams, phone scams and preparer fraud.
For example, the IRS warns that it will never email you to ask for personal information. If you receive such an email, it is probably a common Internet scam called phishing. Report these tax scams by forwarding the email in question to the IRS at email@example.com.
Additionally, depending on the nature of the information requested and its method of delivery, you might need to involve either the U.S. Securities and Exchange Commission or the Federal Trade Commission. When the tax fraud has led to a financial loss, the IRS suggests starting with the Treasury Inspector General Administration, as well as filing a complaint with the FTC to aid investigators in pursuing the guilty parties. The SEC gets involved when the fraud involves stock or share purchases.
Tax preparer fraud is also a common tax scam that occurs because so many taxpayers rely on others to file their taxes. In January, IRS Commissioner John Koskinen said in a release, "Most tax professionals provide top-notch service, but we see bad actors every year that steal from their clients or compromise returns in ways that can severely harm taxpayers."
If you suspect fraudulent activity by a tax return preparer, the IRS advises you complete Form 14157 online or mail it to the IRS address. And if you think a tax return preparer filed or altered your return without your consent and you're seeking a change to your account, you should use Form 14157 and Form 14157-A.
Be proactive in fighting back against tax scams
As with any type of fraud or scam, the most dangerous thing you can do is to remain quiet. It is unfortunately common for tax scam victims to simply say nothing, hoping that the problem will simply go away. But staying silent robs you of the ability to proactively involve the IRS. Being ahead of the problem, once discovered, is a good way to protect yourself from a tax scam.
Once you have identified the issue you are facing and reported the matter to the appropriate agencies, it is important to stay on top of your claim. The IRS and the FTC are each making significant pushes to combat tax scams, but it is up to you to make sure that your case works its way through the system and that the deadlines you are given are met.
Escalate your claims when needed
The IRS acknowledges that it does not always handle issues as seamlessly as it should. For this reason, the IRS created the Taxpayer Advocate Service, which describes itself as "your voice at the IRS." The circumstances under which the IRS suggests contacting the TAS are when:
- The tax issue you are trying to work through is creating real financial problems for either you, your family or your business.
- You are (or your business is) facing an immediate threat of adverse action.
- After multiple attempts to contact the IRS, you have either not heard anything in reply or an IRS-imposed deadline for responding has passed without any further communication.
The TAS is an independent organization within the IRS and operates with the sole purpose of helping taxpayers resolve their tax issues. Furthermore, every state has at least one Local Taxpayer Advocate that you can contact for help. These advocates report directly to the National Taxpayer Advocate and operate independently of the local IRS office, meaning that they serve as a point of escalation if you are having trouble getting your tax problem addressed and resolved.
If you have been a victim of tax fraud or a tax scam and need to clear your name with the IRS, address the problem right away. The IRS and TAS provide a variety of resources to help you identify potential threats before they occur and combat them once they happen. You might need to file a complaint with multiple agencies, but given the complexities involved, the TAS is there to help if your initial efforts do not resolve your tax scam problem.
This article originally appeared on gobankingrates.com.
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