Protect Your Small Business: The Best Ways to Avoid Tax Season Scams

Some of you may be old enough to remember the AT&T marketing campaign from the mid-1980s that encouraged people to “Reach out and touch someone.”

Fraudsters are taking that advice, but instead of “touching” they are scamming small businesses and individuals. And because we’re in the throes of tax season, IRS- and tax-related scams are going into overdrive.

One of the most popular scams – and one that has cost taxpayers $15.5 million since 2013 – revolves around a phone call from a bogus IRS agent demanding payment of delinquent back taxes. According to reports, more than 366,000 people have received this call and about 10 percent have fallen for the ruse – some forking over hundreds of thousands of dollars.

Playing on our paranoia

Many of us would immediately go on the defensive if we get a call from an IRS agent and try to do whatever it takes to get ourselves out of the jam we are allegedly in. Add a caller ID that makes it look like the caller is from a government agency, and it’s easy to see how someone would fall for the scam.

However, it’s an unfortunate fact of modern life that the con artists know how to “spoof” the caller ID system and make it say anything they want. Don’t trust your called ID.

Further, know that the IRS virtually never calls out of the blue. You would have been receiving correspondence documenting your situation before it ever gets to the point of speaking to an agent, either in person or over the phone. The IRS also won’t threaten you with arrest or deportation, so if the person on the other end of the line is coming on strong, you can be sure it’s a scam.

Scammers are leveraging technology for this kind of fraud, so instead of a nasty phone call, you might get a nasty “phishing” email. In this case, the fraudster may not be looking for payment, but for your social security number and passwords. An especially alluring version of this scam is to send you an email saying that you have a tax refund waiting, but you just need to confirm your contact information. The email links to a webpage that looks just like a typical IRS webpage.

Again, the IRS will never request information from you like this. Also, get tuned into the phishing scam warning signs. Look at email addresses closely. Minor changes in names should set off alarms. Examine link destinations before clicking on them.

Other tax-season scams to look out for:

Tax preparer fraud. If your tax preparer suggests extraordinary means to shelter income or avoid taxes, it’s a major warning sign. It tells you that the person across the desk is dishonest and may be getting ready to scam you. At the very least, you could end up in trouble with the IRS.

Bogus charities. Tax time is the ideal season for people to start soliciting for fake charities. They play on our desire to do good and lower our payment to Uncle Sam. No matter what month it is, you should vet charities before giving them your support. There are many websites where you can get information about charities. The Better Business Bureau operates the BBB Wise Giving Alliance where you can get good information. Others, such as Charity Navigator, have rating systems for charities that look at financial metrics and other attributes.

Identity theft. All the forms we fill out and people we talk to during tax season make it the ideal time for crooks to steal your identity. Papers in the garbage with your social security number or employer identification number are easy pickings for the bad guys. And if you get hooked into donating to a fake charity, they might squeeze your credit card information out of you as well as your social security number.

Here’s an IRS webpage that gives you all the contact and reporting information you need if you suspect tax fraud. But be careful enough that you don’t need it. Our tax bills are high enough without the extra expense of being bilked.

This post originally appeared on THE Small Business Expert blog here.