February 7, 2022

It’s tax season. That means you’re gathering paperwork, filling out forms, sending items to your tax preparer, and dodging the scammers trying to take advantage of you. 

Although those annoying phone calls and emails saying you owe taxes and that the IRS is sending a sheriff to arrest you for non-payment come throughout the year, they ramp up in the first few months when we’re deep in tax time. And phone number spoofing can make it look like the call is coming from a legitimate IRS agent.

The good news is that you can completely ignore those calls. The IRS will not email you to collect any outstanding tax debt, and it's only in rare instances when they will call. Instead, they send a paper bill through the postal mail. If you aren’t sure, you can check your IRS account status online at IRS.gov. If you owe anything, you can review the payment options there — and none of those options involve paying a third party. The same is true of Hawaii’s Department of Taxation. They will contact you by mail, and they will only request that you make the payment out to “Hawaii State Tax Collector.” If you don’t have any reason to think you owe back taxes, you can safely hang up or delete an email. Don’t give any personal information over the phone or online, especially your social security number.

Now that we’ve debunked these obvious scam calls, it may seem like we’re in the clear. But many tax scams are harder to identify, and they can be costly if you fall for them.

Preparer Scams

Scammers set up fly-by-night tax preparation services. They get all your information, but they either don’t file your taxes, or they file them and claim the refund for themselves.

Avoid these scammers by choosing a tax preparer that is available year-round. Also, ask to see their Preparer Tax Identification Number (PTIN). All paid preparers must have one. If a family member or friend is preparing your taxes for you, don’t sign a blank form, and ensure that you look over the form and feel comfortable with the information presented before signing it.

If someone promises a huge refund if you let them prepare your taxes, be wary. It could be that you are having too much taken out of each paycheck, but often these preparers are fudging numbers or using fraudulent methods to claim more than your entitled refund. You will be on the hook if your tax forms are incorrect.

Settlement Scams

If you owe taxes, avoid companies that offer to settle that debt for pennies on the dollar. They often charge enormous fees upfront and cannot settle for anywhere near what they’ve promised. The IRS and the Department of Taxation have ways to help you pay the taxes you owe without using one of these predatory companies. Just contact them to discuss your options before accepting an offer from a settlement company. And know that unless you have dire circumstances, neither the IRS nor the state is likely to settle tax debt for much less than you owe. The more likely option is more time to pay.

Fake Check Scams

With the stimulus payments and child tax credit payments many of us received in the past few years, it may seem more familiar to receive checks periodically from the IRS. But some of these checks may be fraudulent. Before depositing these checks, check to see if they are legitimate. The easiest way is to hold them up to a light and look for a watermark that says “U.S. Treasury” on both sides of the check.

In addition, you can help prevent such fraud by signing up for direct deposit. You’ll need our routing number and your account number.

Other Scams

Other phishing scams might catch you off guard. Fraudsters are sending emails that ask you to fill out an FBI survey, a refund reassessment form, or an edited version of a legitimate tax form. Or they might send a link to view your tax transcript or records before you submit. These are not honest communications, and you should delete them immediately. You can report them to the IRS at [email protected] or Hawaii’s Department of Commerce and Consumer Affairs at https://cca.hawaii.gov/ocp/.

With all the stress we sometimes feel about taxes, it can be easy to fall for these scams. Fraudsters spend time making their pitches sound legitimate, and they prey on your fears. Just take a minute — and a deep breath — before responding. That will give you time to assess whether the communication you’ve received is real or fake.