This Tax Expert Explains How to Avoid a Tax Scam

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  • Criminals will often attempt to impersonate the IRS in an effort to steal your refund or other personal information.
  • Knowing how the IRS operates could help you avoid getting caught up in a tax scam.

Knowing some simple rules could help you avoid being a victim.

Through the years, the use of technology has allowed criminals to get increasingly efficient at stealing consumers' identities and robbing them out of their hard-earned money. There were around 8 million potential tax fraud alerts in 2022 alone, according to IRS data. And Mark Steber, Chief Tax Information Officer at Jackson Hewitt, knows full well that tax scams are a major problem. That's why he has some key advice for consumers that could help many people avoid becoming a victim.

It's essential to know how the IRS communicates with taxpayers

The IRS has, for many years, been sorely underfunded. The good news, says Steber, is that's changing. But because the IRS has been a bit slow to adopt certain technologies, its go-to method of communication is, and has long been, paper mail.

When it comes to sending out payments for refunds, thankfully, the IRS is able to do direct deposits into checking accounts. But actual communication is done by mail. You might get an IRS notice in the mail, for example, seeking out more information about your taxes.

But Steber wants to make it clear that unless you receive an IRS notice in the mail, you should assume that anyone contacting you claiming to be a representative of the agency is trying to defraud you. As Steber says, "The IRS never calls, the IRS never texts, the IRS never emails."

So let's say you're going about your day when you get a call from someone claiming to be an IRS agent asking you to verify your banking details so they can finish processing your refund. That alone is a red flag, because the IRS doesn't make those sort of calls.

Similarly, you might get a text with a link asking you to click to verify your Social Security number so your tax return can be processed. Again, this is something the IRS just plain does not do. So that's the sort of text you'll want to delete or ignore.

A good way to prevent tax refund fraud

Criminals are notorious for trying to steal other people's tax refunds. But there are steps you can take to protect yours. First, follow Steber's rules and never respond to so-called IRS communication by phone call, text, or email. Next, try to file your tax return ahead of the April 18 deadline.

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If a criminal already has your Social Security number, they may try to file a tax return in your name and divert your refund to a bank account only they have access to. But the IRS is set up to flag tax returns with the same Social Security number as duplicates. So if you get your return in before a criminal files one with your name, the IRS will flag theirs as a duplicate. And chances are, from there, that criminal will back off.

It's unfortunate that consumers today have to worry about tax-related scams and financial fraud. But following Steber's guidance could help you avoid becoming a victim -- and potentially letting someone steal your tax refund in the process.

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