Identifying and Safeguarding
Against Common Tax Scams in 2024

As tax season approaches, the threat of scams targeting both individuals and business owners looms large. In 2022 alone, taxpayers suffered a staggering $5.7 billion in losses due to tax scams and fraud, as reported by the Better Business Bureau. To protect yourself from falling victim to these scams, it is crucial to stay informed about the prevalent schemes. In this article, we will highlight the top tax scams businesses should be wary of in 2024, offering insights to reduce the risk of financial loss and compromised personal data.

Understanding Legitimate IRS Communication
To avoid falling prey to Internal Revenue Service (IRS) scams, it is essential to be aware of the legitimate ways the IRS contacts taxpayers. The IRS strictly avoids initiating communication through email, text messages, or social media platforms for soliciting personal or financial information. The primary mode of communication is physical mail, with phone calls as a secondary option, although the IRS refrains from soliciting sensitive information over the phone or making threats. It is advisable to verify the authenticity of any communication received from the IRS through reliable channels. Visit IRS.gov for more information about specific tax scams and consumer alerts.

Key Tax Scams to Watch Out For:

1. The Refund Scam: Beware of scams claiming unclaimed refunds, often delivered through formal-looking letters or packages that mimic certified delivery services. These deceptive communications provide contact information and phone numbers unrelated to the IRS, requesting sensitive details, including images of driver’s licenses. Vigilance is crucial in recognizing these misleading tactics and avoiding potential identity theft.
2. Identity Theft: With access to personal information, cybercriminals can file fraudulent tax returns, leading to potential refund payments. Applying for an Identity Protection PIN from the IRS before filing your return can be an effective tool to prevent tax-related identity theft. Filing early and promptly addressing any notices related to duplicate returns or additional taxes owed are also recommended.
3. The ERC Scam: Promoters misrepresenting the Employee Retention Credit (ERC) have been on the rise, charging substantial upfront fees. It is essential for businesses to thoroughly review the official requirements for the ERC before claiming the credit and avoid falling victim to misleading schemes.
4. The “Impact Payment” Scam: A new online scam involves emails displaying the IRS logo and referencing the third round of economic impact payments. Caution is advised against clicking any links in such emails, as they may lead to phishing attempts or malware installation.
5. The “Additional Information Needed” Scam: Be cautious of emails purportedly from the IRS requesting direct submission of tax forms. Legitimate forms are typically directed to companies, not directly to taxpayers. Any such email solicitation is indicative of fraudulent activity, and it is recommended to report the fraud to the IRS promptly.
6. Another Tax Agency Scam: Scammers may impersonate legitimate or fictitious tax agencies during phone calls. Exercise caution and skepticism towards unsolicited calls, obtain reference numbers if possible, and initiate return calls using officially verified phone numbers to protect against potential scams.

Protecting Yourself

To enhance protection against scams and identity theft, consider filing your taxes early, reducing the window for scammers. When hiring a tax preparer, conduct thorough vetting, and be wary of promises of substantial refunds without prior access to your information. Exploring a fraud protection service adds an extra layer of security and peace of mind.

In conclusion, staying vigilant and informed is crucial during tax season to safeguard against common scams. By understanding these schemes and adopting proactive measures, businesses can protect their finances and sensitive data from falling into the hands of cybercriminals.