5 tips to stay safe from IRS tax scams

The end of the year and the run-up to tax day is one of the most active times for scammers.

Cases of scammers trying to steal consumers' tax refunds or falsely representing themselves in order to get a "tax payment" are widespread.

The Treasury Inspector General for Tax Administration has received notice of about 736,000 scam attempts since October 2013. Unfortunately, most of these scams are very advanced and believable, resulting in nearly 4,550 victims that have collectively lost more than $23 million.

The Internal Revenue Service headquarters in Washington, D.C.
Andrew Harrer | Bloomberg | Getty Images
The Internal Revenue Service headquarters in Washington, D.C.

One of the most effective tools to protect yourself is knowledge. With that in mind, below you'll find five helpful tips to avoid putting yourself at risk.

  1. The IRS will never reach out to anyone via email. If you receive an email, do not reply to the message, open any attachments or click any links. Forward the email as-is to the IRS at phishing@irs.gov. Delete the original email.
  2. The IRS will rarely contact anyone by phone. Many scammers are contacting taxpayers claiming to be IRS officials. It's important to know that a call will not be the first form of contact for the IRS. First, the IRS will send you a letter or bill outlining any action you need to take. A call will rarely follow. Scammers often alter the caller ID to make it look like the IRS or another agency is calling. If you receive a phone call from the IRS, take down the individual's name and badge number, then call the IRS back at 800-829-1040 to determine if the IRS has a legitimate reason to contact you.
  3. The IRS will not demand immediate payment. The IRS will not demand "urgent" payment or apply excessive pressure for any outstanding payments. For example, some scammers threaten to arrest, deport or revoke your license if a payment is not made immediately. If you owe tax, the IRS gives you the right to question or appeal the amount you owe. Phone threats are not how they enforce the tax code.
  4. The IRS does not require you to pay a certain way. The IRS will not ask for credit or debit card numbers over the phone. Normally, scammers try to persuade the victim into sending cash, usually through a prepaid debit card or wire transfer.
  5. The IRS does not ask for detailed personal information. This includes requests for PIN numbers and passwords or access information for credit cards, banks or other financial accounts.

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Overall, it is important that you are aware of the different ways the IRS will contact you if there are any issues with your tax return. If you have any concerns about whether or not a notice you receive from the IRS is legitimate, please contact the IRS immediately.

If you receive a notice from a person posing as an IRS agent asking you for more detailed information, it is likely that you are the victim of an IRS scam. If you realize you are being contacted by an individual posing as the IRS, please go to the FTC Complaint Assistant and submit your complaint. Together, we can work toward detecting patterns of fraud and abuse.

(Editor's note: This column first appeared on Investopedia.)

— By Jen Dawson, wealth manager at Balasa Dinverno Foltz

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