They say death and taxes are life's only certainties.
Maybe not anymore.
According to Money, tax scams are up another 400 percent this year, and many Americans are being robbed of the taxman's only respite — the tax refund check.
Each year the IRS releases a list called "the dirty dozen," or the top 12 tax scams of the year. Here are the most prevalent of those scams for 2016, how to avoid them, and what to do if you are a victim:
Tax-related identity theft means criminals stealing your Social Security number and using it to claim your tax return. That's all it takes to steal your tax return: your Social Security number.
The IRS claims to be taking greater measures for security, saying that it led 776 investigations of identity theft in 2015, leading to 774 sentencings. But these convictions are nothing compared to the number of successful identity thefts.
In 2014, 2.7 million taxpayers were victims of identity theft and 104,000 tax forms were fraudulently taken from the IRS website, reports CNN.
In order to avoid identity theft, the IRS recommends taking precautions to protect your Social Security number.
"Keep your personal information secure by protecting your computers and only giving out your Social Security numbers when absolutely necessary," says IRS Commissioner John Koskinen in the IRS statement..
You won't know if your identity has been stolen until you submit your tax return and receive a notification from the IRS saying that a return has already been filed with your Social Security number, says TurboTax.
At this point, you will have to submit IRS Form 14039 with a copy of your Social Security card and a government-issued ID.
TurboTax also warns that if someone has filed a tax return in your name, they probably have enough of your information to cause other problems for you. Freeze your credit report file and report the identity theft to your local police and the Federal Trade Commission.
Phony phone calls and emails
Criminals will often impersonate IRS officials over the phone, threatening legal action, arrest, deportation and other unpleasantries.
They then use these threats to elicit payments, get credit information over the phone or otherwise con people into giving them money.
"Don't be fooled by callers pretending to be from the IRS in an attempt to steal your money," said Koskinen. “If you are surprised to be hearing from us, then you're not hearing from us.”
Scammers will similarly use a method called "phishing," or sending emails that appear to be from the IRS in order to get your personal information.
It should be noted that these communications may appear to be legitimately coming from the IRS. Caller IDs can easily be changed to the IRS using inexpensive — and technically legal — online services, according to ScamBusters.org. Emails can bear official IRS insignia and persuasive language.
But a tell-tale sign that you are being scammed is if the caller or emailer does one of these things — which the IRS says it will never do:
- Calls to demand immediate payment. The IRS won't call about taxes owed without first having mailed you a bill.
- Demands that you pay taxes without giving you the opportunity to question or appeal the amount the caller says you owe.
- Requires you to use a specific payment method for your taxes, such as a prepaid debit card.
- Asks for credit or debit card numbers over the phone.
- Requests personal or financial information by unsolicited email.
- Threatens to bring in local police or other law-enforcement groups to have you arrested for not paying.
If you think you are being scammed, do not give any information. Hang up the phone if a caller is threatening you. Don't open any suspicious emails and don't click on any links — which could install malware on your computer. If you have any questions about the authenticity of calls or emails, it is always better to call the IRS yourself at 800-829-1040.
Tax preparer fraud
Though most tax professionals are trustworthy, some tax-return preparers are looking to take advantage of their clients, says the IRS.
These scammers may mislead taxpayers by falsely promising high returns, or they may make unwarranted tax deductions on your return.
In order to make sure your tax preparer is legitimate, you should verify his Preparer Tax Identification Number, which all paid tax preparers are required to have.
You can also check the preparer's qualifications on the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.
The IRS also cautions about taking tax advice from preparers or others that may be illegal. These tax behaviours include offshore tax avoidance, falsely "padding" or inflating tax deduction claims.
You should also avoid "frivolous tax arguments," which are outlandish claims and deductions. Forbes reported a list of people whose "crazy sounding tax deductions" were upheld by the tax court, including a woman who wrote off cat food as a "charitable contribution."
While these people have chosen to defend their outlandish tax deductions, if your claims are found to be frivolous, you could be slapped with a $5,000 fine.