How To Help Clients Avoid Tax Scams

Tax-related scams this year are sophisticated, using the latest in graphic reproduction and personal communication tech to trick taxpayers, especially wealthy clients, advisors say.

“Everyone could be at risk for scams unless they have the tools to protect themselves and they take action,” said Amber Kellogg, vice president for affiliate origination and management at Occams Advisory in Scottsdale, Ariz. “Wealthy clients aren’t immune to tax scams [and] they may be more likely to be targeted.”

Criminals are trolling for personal and account information and even for driver’s license photos, including sending letters, sometimes special delivery, with IRS insignia and masthead. Crooks also still rely on threatening phone calls to taxpayers and this year have targeted tax preparers by claiming to be prospective new clients.

“Many of the tactics involve either an email or text from a scammer informing the taxpayer that they either owe money or are due a refund,” said John Bute, managing director of Lido Advisors in Los Angeles. “Scammers will also make fraudulent phone calls."

Scam artists sometimes pose as fake IRS agents, with false badge numbers and Caller ID listings, and try to elicit payments from taxpayers through wire transfers or even gift cards, he said.

“They may also threaten to cancel your Social Security number if payment isn’t sent immediately," he said. “Scammers are now able to send correspondence that looks extremely close to what is typically sent from the IRS."

Brute said that advisors should instruct their clients to be wary of such tactics.

“Pay careful attention to notice dates and the required action or payment date” on a letter, Bute said. “The scammer wants the information or money quick. They’ll use due dates very close to the date the notice was mailed. They’ll request action immediately or within 72 hours. This is not the case for initial notices sent from the IRS.”

Advisors should also be aware that the IRS produces resources on how to guard against scams and regularly issues press releases about tax-related scams and an annual "Dirty Dozen" list of common scams, said Miri Forster, a partner and national leader of the Eisner Advisory Group’s tax controversy and dispute resolution practice group in Iselin, N.J.

“The IRS first reaches out to a taxpayer by letter. It does not call, email, text or send messages via social media,” Forster said. If a client's initial contact from the IRS is by other than a letter, they should be told to not open the links. Advisors should also tell clients that if they are unsure if an IRS letter is legitimate, they should check the IRS website for the letter type referenced in the upper right-hand corner," she said.

Taxpayers can create an online account with the IRS to access their tax information and manage their accounts, Kellogg said. “This allows them to monitor their tax activity [for] suspicious or unauthorized activity,” she said. Clients should be made aware that they can forward suspicious emails to phishing@irs.gov and report scam calls on the IRS website, she added.

Forster also advised that victims of tax-related ID theft get an Identity Protection number, an annual six-digit number used by the IRS to prove a taxpayer’s identity when they file a return.