How do I recognize tax scams?

To help the public recognize and avoid abusive tax schemes, the IRS offers an abundance of educational materials. Participating in an illegal scheme to avoid paying taxes can result in imprisonment and fines, as well as the repayment of taxes owed with penalties and interest. Education is the best way to avoid the pitfalls of these "too good to be true" tax scams.

As a general rule, the IRS does not send out unsolicited e-mails or ask for detailed personal information. Additionally, the IRS does not ask people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

Identity theft may be conducted via e-mail (a practice sometimes known as phishing), standard mail, telephone or fax. Thieves also may go through trash looking for discarded tax returns, bank records, credit card receipts or other records that contain personal and financial information.

When the IRS learns about schemes involving use of the IRS name, it tries to alert consumers as well as authorities that can shut down the scheme, if possible.

The following are examples of recent schemes:

Phony E-mails

Emails claiming to come from tax-refunds@irs.gov, admin@irs.gov or other variations on the irs.gov domain name inform the recipients that they are eligible to receive a tax refund for a given amount. The email directs recipients to claim the refund by using a link contained in the e-mail, which sends the recipient to a Web site. The site, a clone of the IRS Web site, displays an interactive page similar to a genuine IRS one; however, it is modified to ask for personal and financial information that the genuine IRS interactive page does not require.

Fake Letters

A bogus IRS letter and Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) asks non-residents to provide personal information such as account numbers, PINs, mother's maiden name and passport number.

The legitimate IRS Form W-8BEN, which is used by financial institutions to establish appropriate tax withholding for foreign individuals, does not ask for any of this information.

Protection Methods

• Be skeptical of communications you receive from sources you are not expecting. Verify the authenticity of phone calls, standard mail, faxes or e-mails of questionable origin before responding.
• Do not reveal secret passwords, PINs or other security-based data to third parties; genuine organizations or institutions do not need your secret data for ordinary business transactions.
• Do not click on links contained in possibly questionable e-mails; instead, go directly to the site already know to be authentic. For example, the only address for the IRS Web site is irs.gov. Any other variations on this will not lead to the legitimate IRS Web site.
• Do not open attachments to e-mails of possibly questionable origin, since they may contain viruses that will infect your computer.
• Shred paper documents containing private financial information before discarding.

Disclaimer: The National Small Business Association is in no way providing tax advice. The organization only is providing information. Before filing your tax return or proceeding with any official action, please consult a tax professional.