CARL WATTS & ASSOCIATES

August 13, 2018

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The Latest on the Tax Scams Front
Note that the IRS doesn't:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.

  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

  • Demand payment without giving you the opportunity to question or appeal the amount they say you owe.

  • Ask for credit or debit card numbers over the phone.


Scams Targeting Tax Professionals

Increasingly, tax professionals are being targeted by identity thieves. These criminals (many of them sophisticated, organized syndicates) are redoubling their efforts to gather personal data to file fraudulent federal and state income tax returns.

The IRS and Security Summit partners warn tax practitioners to beware of phishing emails posing as state accounting and professional associations that are trying to trick them into disclosing their email usernames and passwords.

Other recent scams targeting the tax professional community include criminals targeting tax professionals to steal data such as PTINs, EFINs or e-Service passwords.

Bogus email asks tax professionals to update their IRS e-services portal information and Electronic Filing Identification Numbers (EFINs).

You should check Publication 4557, Safeguarding Taxpayer Data, A Guide for Your Business, which provides a checklist to help safeguard information and enhance security.

Soliciting Form W-2 information from payroll and human resources professionals.


The IRS has established a process that will allow businesses and payroll service providers to quickly report any data losses related to the W-2 scam currently making the rounds. If notified in time, the IRS can take steps to prevent employees from being victimized by identity thieves filing fraudulent returns in their names. There also is information about how to report receiving the scam email.

To report such schemes you may use the following tools:

  • Email dataloss@irs.gov to notify the IRS of a W-2 data loss and provide contact information. In the subject line, type “W2 Data Loss” so that the email can be routed properly. Do not attach any employee personally identifiable information.

  • Email the Federation of Tax Administrators at StateAlert@taxadmin.org to learn how to report victim information to the states.

  • Businesses/payroll service providers should file a complaint with the FBI’s Internet Crime Complaint Center (IC3.gov). Businesses/payroll service providers may be asked to file a report with their local law enforcement.

  • Notify employees so they may take steps to protect themselves from identity theft. The FTC’s www.identitytheft.gov provides general guidance.


Employers are urged to put protocols in place for the sharing of sensitive employee information such as Forms W-2. The W-2 scam is just one of several new variations that focus on the large-scale thefts of sensitive tax information from tax preparers, businesses and payroll companies.

Tax professionals who experience a data breach also should quickly report the incident to the IRS.

Participating in illegal schemes can lead to significant fines and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

The best defense for you as taxpayers is to remain alert and get in touch with a trustworthy tax professional whenever you are in doubt or suspect fraudulent conduct.

Every year, people fall prey to tax scams, in spite of numerous warning signals and consumer alerts all over the media. Thousands of people have lost millions of dollars and their personal information to tax scams.

Every year, the IRS publishes the "Dirty Dozen" list of tax scams with a warning to taxpayers to remain vigilant about these aggressive and evolving schemes throughout the year.


This year's “Dirty Dozen” list highlights a wide variety of schemes that taxpayers may encounter throughout the year, many of which peak during tax-filing season. The schemes can run the gamut from simple refund inflation scams to technical tax shelter deals. A common theme throughout these: scams put taxpayers at risk.

You need to guard yourselves against ploys to steal your personal information and be wary of shady promoters trying to scam you out of money or talk you into engaging in questionable tax schemes.

Scams Targeting Taxpayers

With hurricane season underway, IRS warns of scams related to natural disasters as criminals and scammers often try to take advantage of the generosity of taxpayers who want to help victims of major disasters.

The IRS also warns taxpayers to remain vigilant for phishing emails and telephone scams. Summertime tends to be a favorite period for scammers because many taxpayers have recently filed a return and may be waiting for a response from the IRS.

A new twist on an old phone scam consists of criminals using telephone numbers that mimic IRS Taxpayer Assistance Centers to trick taxpayers into paying non- existent tax bills.

Don’t be a victim of ‘ghost’ tax return preparers. A ghost preparer is paid to prepare a tax return but does not sign it as the paid preparer. These phantom preparers who won't put their name on the tax return are a warning sign for taxpayers of a potential scam. At the same time, taxpayers should keep in mind that they are legally responsible for what is on their tax return even if it is prepared by someone else.

The “IRS Refunds” scam is a common tactic used by cybercriminals to trick people into opening a link or attachment associated with the email that takes people to a fake page where thieves try to steal personally identifiable information.


Beware of fake calls to return money to a collection agency.

After stealing client data from tax professionals and filing fraudulent tax returns, criminals use the taxpayers' real bank accounts for the deposit. Thieves are then using various tactics to reclaim the refund from the taxpayers, and their versions of the scam may continue to evolve.

A sophisticated impersonation phone scam targeting taxpayers, including recent immigrants, has been making the rounds throughout the country. Callers claim to be IRS employees, using fake names and bogus IRS identification badge numbers. They may know a lot about their targets, and they usually alter the caller ID to make it look like the IRS is calling.

Victims are told they owe money to the IRS and it must be paid promptly through a gift card or wire transfer. Victims may be threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting. Victims may be told they have a refund due to try to trick them into sharing private information. If the phone isn't answered, the scammers often leave an “urgent” callback request.

Some thieves have used video relay services to try to scam deaf and hard of hearing individuals. Taxpayers are urged not to trust calls just because they are made through VRS, as interpreters don’t screen calls for validity.

Limited English Proficiency victims are often approached in their native language, threatened with deportation, police arrest and license revocation, among other things.

IRS urges all taxpayers caution before paying unexpected tax bills.

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