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Tax Email Scams of 2012 and How to Avoid Them


Tax is a pain in the backside, and nobody really likes having to pay more tax than they have to. In fact, if someone says he or she loves paying tax, you can probably call that person mad with some justification.

Unfortunately, there really are some people who love the end of the tax year, because it is their opportunity to cash in on their scams. Some of these scams are pitiful, thanks to bad spelling, basic errors, and general incompetence, but some scams are a bit more sophisticated. Here is our rundown of the top three tax scams of 2012.

Phishing Scams

What is it? You have just received an e-mail that states you have to pay some sort of tax penalty. Naturally, the e-mail says you have to fill in a load of personal information, and you must do this electronically. The IRS's logo is often prominent somewhere in the letter, and you will always see some sort of official-looking address. Between two and three percent of all e-mails are phishing scams.

How do I recognize it? In reality, the IRS nearly always contacts you by post. If you get an e-mail or a text message stating it's from the IRS, it never is. People have even been defrauded through Facebook before, and that is simply mind-boggling. Unfortunately, the scams rely on people seeing the words IRS in the title of the e-mail and losing all self-control and cynicism, and in a country with 300 million citizens, there will always be those who fall prey to this form of scam.

How do I prevent it? If you do receive an e-mail or text message or any other communication that isn't via the post, you can safely ignore it. The best place for these electronic communications is in the recycle bin.

Identity Theft

What is it? Impersonation is a great art form when used as satire. However, when a scammer gets hold of your personal data, such as your Social Security number, date of birth, name, and birthplace, that person can do a lot of damage to your financial assets. If your number is transferred to someone who is working, normally illegally, you can find yourself with a much larger tax bill than expected. In addition, someone with that information can kindly file a tax return on your behalf. Of course, you won't receive a penny of it.

How do I recognize it? Identity theft is one of the harder scams to recognize. You may find strange transactions on your credit card statements, cards going missing, or unauthorized changes of address on your accounts. In addition, you can always check your credit report to check whether your credit rating has mysteriously dropped.

How do I prevent it? The best way to avoid identity theft is to keep your data secure at all times. Don't give any of your details to cold callers and never give details by e-mail. Naturally, you have to give out some of your information to employers. But, if you think your information is not secure or if it has been copied, tell the IRS as soon as possible. You don't want someone taking your hard-earned tax dollars, do you.

Bogus Accountants

What is it? This one is probably the hardest to protect yourself from. More than half the population rely on someone else to prepare their taxes at the end of each year, so it's not uncommon to encounter the odd rogue preparer. Simply speaking, it's normally an unqualified, incompetent, or dishonest accountant.

How do I recognize it? While some simply charge far too much for their services, there are other ways of extorting money from you. Some might encourage you to lie on your tax form, safe in the knowledge that when they steal a proportion of your tax refund, you're probably not going to report them. Alternatively, they might simply promise to effectively negate your tax bill. While this might actually be realistic to some people, to the majority, it is not.

How do I prevent it? Fortunately, the IRS has finally made it easy for you to check whether your accountant is legitimate. Ask him or her for a Preparer Tax Identification Number, or PTIN. A genuine tax preparer will normally include this number on your tax forms and have it to hand if you ask for it. Be skeptical if he or she does not do either of these things. Oh, and lying is a big no-no - if you are caught lying on your tax form, guess who will get the punishment.

By remaining vigilant, you can ensure that you will not fall for any of these common tax scams. It is very rare that you get anything for free, so if someone is offering you unrealistic riches for doing very little, particularly from Nigeria or Iraq, be skeptical. Likewise, if someone sends you an e-mail saying you owe the IRS thousands, put it straight in your junk bin. If you think you're the victim of a scam, file a case with the IRS or Federal Trade Commission at phishing@irs.gov or at spam@uce.gov. If you believe your preparer is dishonest, contact your state's department of revenue.

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