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SMART INSIGHTS FROM PROFESSIONAL ADVISERS

IRS Scams: How to Spot Them and Report Them

If you're getting hounded by calls, emails or letters from the IRS, how do you know they're legit? Here are some warning signs of scams to watch out for.

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Every year I seem to get multiple calls from scam artists pretending to be the IRS. Luckily for me, I know they are scams, and I hang up with no harm except for my day being interrupted.

SEE ALSO: How to Spot a Scam: Here are 3 I Dodged

However, it really upsets me to think that many vulnerable elderly people are falling for such scams, especially widows, because they may be a little less technically or financially sophisticated. When they are told they owe money, they feel intimidated and send a check.

With every tax season, it seems that scams get more advanced, increasing the odds of enticing innocent people into sharing their personal information and making unneeded payments. They now even use caller ID “spoofing,” where the call coming in looks like it is from the IRS or another official entity. They might even have gotten some personal information, so when they share those details, they seem to be legitimate professionals.

Here is a list of things to look out for.

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1. Watch out for phone calls.

It’s rare for the IRS to call a taxpayer. In fact, the IRS initiates most contact through regular mail, NOT by phone. Even when it does call a taxpayer, it will generally send several “notices” by mail first. In addition, the IRS does not leave urgent time-sensitive calls where someone needs to immediately pay their tax bill.

These are often robo-calls tapping into honest people wanting to do the right thing. When they are told they owe money, they become scared they are accidentally breaking the law and do not want to get in trouble. Then they mistakenly follow instructions to make payments, sometimes wiring money, providing credit card information or using a prepaid debit card.

It isn’t always a recorded voice. Sometimes real people are on the line. If they are demanding in any way, that is a main warning sign that it is probably a bad individual.

2. Beware of emails.

Phishing is the term used to describe email attempts at getting sensitive information and money by appearing to look like they are coming from a trustworthy person or organization. They can often link to fake websites that seem to be very real. Plus, they often ask for bank information to make a refund payment, which allows them to steal money out of accounts.

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Even worse, just by clicking on the links in emails, it allows malware to be installed on one’s phone, tablet or computer, letting the bad guys in so they can get existing information and capture future activity.

Imagine someone getting what they think is an official email stating they are receiving a refund. It becomes too easy for those unaware of these scams to simply click on a link. What seems like harmless research, tapping into human curiosity, allows the bad guys to win.

The IRS does not initiate taxpayer communications via email, text messages or social media. Please report unsolicited emails claiming to be related to the IRS by sending it to phishing@irs.gov.

See Also: How 10 Types of Retirement Income Get Taxed

3. Be cautious of letters.

It is super easy for a graphic designer to take an IRS logo and make letterhead look official. Sometimes they even create supporting documents that look to be very official.

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They even use website URLs that look close to official website addresses, with just one or two letters different. If you get a letter from the IRS that seems at all suspicious, then before sharing any of your personal information or taking any other action, you can call the agency itself at 800-829-1040 to see if it has any real need to contact you.

If the letter is real, the IRS will confirm it. If not, then it would be helpful for it to know about and will help it track the latest scams. Always check with an accountant, financial planner or an independent governmental agency to make sure the request is legitimate. DO NOT call any of the numbers provided by the sender.

4. Ask someone you trust.

If you get contacted by the IRS, reach out to someone who can properly advise you on what to do. For example, an accountant or financial adviser can help assist with any questions you have so you do not accidentally do the wrong thing.

Calling the IRS is also an option. Look up the contact information for your local office at www.IRS.gov, not on a site that is provided as part of the scam.

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5. Report scams

If you do encounter one of these scams, please report it to the Federal Trade Commission by clicking here.

Per the IRS, nearly 4,550 victims have collectively paid over $23 million because of these scams. Please share this article related to deceptive scams with anyone who might be at risk of falling for any sort of cons. Let’s hope with, more education, the bad guys do not maliciously scam another person!

See Also: Lock Down Your Smartphone to Prevent Data Breaches

Barbara Shapiro is the President of HMS Financial Group located in Dedham, Mass. She is a CFP®, Certified Divorce Financial Analyst and a Financial Transitionist®. She is also co-author of He Said: She Said: A Practical Guide to Finance and Money During Divorce. Her firm specializes in comprehensive financial planning with a subspecialty in divorce that assists clients' transition from marriage to independence with peace of mind and confidence. Learn more at HMS-Financial.com.

Securities offered through Cadaret, Grant & Co., Inc., member FINRA/SIPC. Advisory services offered through Barbara Shapiro, a Massachusetts Registered Investment Advisor. Barbara Shapiro, HMS Financial Group and Cadaret, Grant & Co., Inc. are separate entities.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.