Rippleshot Consumer Fraud Alert: Tax Season Scams

Weekly consumer fraud alerts from Rippleshot research to stay informed about fraud, scams, and cons, and best practices on how to avoid them.

Due to complexities of how taxes work, during tax season many Americans are easily susceptible to fraudsters taking advantage of them. Tax season brings about a wide variety of scams attempting to part you from your money. 

Common Tax Season Scams:

• Unclaimed Refund Scams: Fraudsters may reach out posing as the IRS informing you that you can claim a tax refund. These fraudsters will then ask you for personal or financial information which can open the door to a slew of other fraud. Recently the IRS has noticed an uptick in this sort of fraud coming in the form of letters that appear to be printed with a legitimate IRS masthead and beginning with: “in relation to your unclaimed refund…” 

• Employee Tax Credit Scams: A tax credit of particular interest to fraudsters is the Employee Retention Tax Credit. This credit is real meaning a cursory search would not indicate you are at risk of fraud, however the requirements to receive this tax credit are relatively stringent. Because of the difficulty in receiving the credit, fraudsters are posing as tax experts and guarantee that you will get the refund for a small fee. If the fee is paid, the fraudster is likely to run with the money and possibly even sell any personal information you provided.

• False Charity Scams: The IRS considers charitable donations when calculating your taxes owed, leading to an uptick in people donating to charity around tax season. Fraudsters have picked up on this and can create fake ‘charities’ in order to get your money. Donating to one of these ‘charities’ does not reduce your tax liability if it is not listed in the IRS’ Tax-Exempt Organization Search (TEOS).

• OIC Mills: Offer in Compromise (OIC) programs are programs that allow taxpayers to pay less than the full amount of their taxes owed if payment of the full amount would result in significant financial hardship. These programs require taxpayers to apply for approval on the IRS website. Fraudsters are exploiting individuals who want to apply for the program by creating companies that claim to guarantee OIC program approval for a fee. No third party can guarantee OIC approval, and taxpayers should not rely on hyperlinks to access the IRS website to apply for OIC, but rather look up the IRS website by themselves.

Best Practices

Contact: The IRS will never reach out to you via social media or text message, the IRS will typically reach out to you via mail and may visit you in person if you have neglected to respond to their mail or calls. If you are unsure about whether you are in contact with the IRS or a scammer, it is recommended you contact the IRS directly via the provided number or email on their website.

Payment: The IRS will never ask you to pay any taxes or fees with a prepaid gift card. Typically the IRS will send a letter requesting payment and provide some options for how to pay them properly including: Deposit from bank account, Debit Card or Credit Card, Same-day Wire, Money Order (Payable to “United States Treasury”) or cash. It is doubly important when sending money to ensure you are in contact with the real IRS. Additionally, the IRS will never demand payment without allowing the amount due to be questioned, and will make sure you are aware of your rights.

Other Action Items:


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Are you a bank or credit union leader looking to optimize your fraud fighting efforts? Connect with our team to learn how you can proactively bolster your payment fraud mitigation practices to better protect your customers.

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