Don’t Be a Fool: How to Avoid Popular Tax Scams

08 May Don’t Be a Fool: How to Avoid Popular Tax Scams

A tax scam you need to know about, and how to avoid popular tax scams.

Written by Matt Wegner
Founder and Lead Counselor, Matt Wegner Financial Coaching,

There are many people looking to steal your money: here’s how to avoid popular tax scams. Over the last year or so, I’ve been receiving an email from the “IRS” telling me there is an extra tax refund available to me. Sounds great, especially in tax season, but there’s a problem with the letter. This letter is a phishing scam. Don’t fall for this.  If you think your tax return was filed incorrectly, contact your accountant to help you review your tax situation. Here’s a copy of the email as it gets sent out, followed by commentary by my accountant.”After the last annual calculations of your fiscal activity
we have determined that you are eligible to receive
a tax refund under section 501(c) (3) of the
Internal Revenue Code. Tax refund value is $189.60.
Please submit the tax refund request and allow us 6-9 days
in order to IWP the data received.
If u don’t receive your refund within 9 business
days from the original IRS mailing date shown,
you can start a refund trace online.
If you distribute funds to other organization, your records must show whether
they are exempt under section 497 (c) (15). In cases where the recipient org.
is not exempt under section 497 (c) (15), you must have evidence the funds will
be used for section 497 (c) (15) purposes. If you distribute fund to individuals, you should keep case histories showing
the recipient’s name and address; the purpose of the award; the manner of
section; and the relationship of the recipient to any of your officers, directors,
trustees, members, or major contributors.
To access the form for your tax refund, please click here This notification has been sent by the Internal Revenue Service,
a bureau of the Department of the Treasury. Sincerely Yours, John Stewart
Director, Exempt. Organization
Rulings and Agreements Letter
Internal Revenue Service “

Now for some notes on the scam from my accountant, Joya Cox of the J. Cox Accounting Firm:

“The above phishing letter contains several warning signs that it is a fake letter by scammers.It does hold some truth in it to make it seem plausible. Here are the items that I noticed.

– IRS never sends emails or makes phone calls to taxpayers.
– IRS never will look over taxpayer returns to see if there are any further tax credits that can be used to increase refund.
– If the IRS plans on contacting a taxpayer, it has its own series of letters to send.

– IRS wouldn’t refer to financial activity as being fiscal in nature because the vast majority of taxpayers are calendar year filers.

– 501(c) (3) is the filing status for tax exempt organizations only. An individual can’t file for this and get a refund. A person can donate to these organizations and claim a deduction on Schedule A. This may or may not be helpful to the taxpayer.
– IRS letters wouldn’t have specific time tables for refund processing.
– This letter has numerous spelling, grammatical errors, and texting lingo. These items would never appear on an official letter from the IRS.
– Section 497(c) (15) doesn’t exist. The real section is 4947 (a) (1). This refers to Nonexempt Charitable Trust treated as a Private Foundation. This has no bearing for private individuals.
– IRS doesn’t allow a deduction for contributions given to private individuals.
– IRS never closes letters by telling the reader the letter came from IRS bureau of the Treasury.
– Job title for IRS is too long.

Phishing letters are just ways scammers get personal information from taxpayers. This information is used to steal identities or steal money from people. Never respond to these letters.”

Joya’s words ring true. Even if you’re not an accounting expert it’s pretty easy to pick out the obvious flaws in their letter but there is just enough legitimacy to the letter to lure you in. I actually visited the link provided in the email and it brought up a form asking for my social security number and credit card number so they could “deposit the money to my account.” This is a huge warning sign right there because the IRS already has my SSN and they would never deposit funds on a credit card account. The bottom line: If it sounds too good to be true it is. And if they ask for your credit card number and SSN, run!

Matt Wegner is a personal finance, small business, and leadership coach focused on teaching his clients the skills for L.I.F.E. (Living In Financial Excellence). Read more about Matt Wegner.
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