While scams come in all varieties, they generally have two common features: The basic foundation is an emotional appeal coupled with a promise of easy money. And tax scams are no different.
One such scam tied to Social Security taxes specifically targets seniors. In this scam, victims are promised a refund on the Social Security taxes that they have paid during their lifetime. But in order to qualify, the phony tax preparer tells the victim to pay an up-front paperwork fee. In reality, there is no refund. This is nothing more than a hoax to soak victims for the up-front fee.
A couple of basic rules apply when it comes to paying taxes. First, there’s a very good chance that anyone who promises you a bigger refund without knowing your tax situation could be misleading you. And second, never sign a tax return without looking it over to make sure it’s correct and honest. The IRS also warns about anyone who identifies himself as an IRS agent and comes to your home to collect. IRS agents, field auditors and collection officers carry photo identification and usually try to contact you before coming to your home. If you have any doubts about a person who comes to your home, lock your door and contact law enforcement.
Each year, the IRS, Better Business Bureau and tax preparers warn residents about common tax scams that make the rounds during the tax filing season. Here are three scams to look out for:
Pay the Tax, Then Get the Prize
The caller says that you have won a prize and all you have to do to collect it is to pay the income tax that’s due. If you really win a prize, you may be required to make an estimated tax payment to cover the taxes that will be due at the end of the year. However, the payment will go to the IRS, not the person calling to tell you that you’ve won the prize.
Untax Yourself for $49.95
This scam seemingly has been around forever. The pitch may be that paying taxes is voluntary, which of course is not the case. Buy one of these bogus untax packages and you’ve bought yourself a ton of problems that could result in civil and criminal tax penalties being assessed.
I Can Get You a Big Refund....For A Fee
Operators of this scam may approach you wanting to borrow your Social Security number. They may even offer to split the refund with you. Don’t fall for it. This is nothing more than a scam that can wind up costing you dearly in the end.