AYF/GF 129 | Tax Scams


It’s tax season and you need to be extra careful these days because tax scammers are not just on the loose, they’re also into the long game! What does this exactly mean? This episode goes deep into phishing and how it happens in the context of tax and credit. Join Merrill Chandler as he details how scammers can pose as IRS agents and contact you through phone or email, get your tax information, and use it to file for credit in your name. Listen in and learn about the red flags that you need to watch out for so that you can easily spot a tax scam should it find its way to you.

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The Top 5 Tax Scams Of 2021

Tax season is upon us. I’ve got a great episode for you about tax scams, people who are doing things to impersonate you, filing tax returns in your name so that they can borrow money later. A whole grip of awesome stuff for us to discover in this episode. When we come back, we’re going to do a deep dive into how people are impersonating you and/or trying to scam you.

It’s tax season. Last 2020, they had a whole bunch of delays and postponements of dates. COVID with the vaccine and all these other things happening seem to be calming down a little bit. What’s not calming down is the scams and what FICO calls the fraudsters who are using your tax information to file your taxes in your place and/or trying to scam you. That’s what we’re going to talk about. This is a sore subject for me simply because as we learned at one of the courses that we went through at FICO 19, they had an entire course on fraudster’s long game. That long game is how they are willing to do much more work than steal your identity or hack your data and file in your name. Fraudsters are capable and willing now to set up long-term cons as it were, where they’re not conning you but they’re conning the IRS.

AYF/GF 129 | Tax Scams

Tax Scams: The IRS will not suspend your social security benefits. It may tax them based on certain things, but they will not suspend them.


Let’s take a look. We’ll start out small and grow out to the bigger and more insidious, evil and ugly versions of trying to impersonate you. First thing, if you’re not anywhere near April 15th then this information is still important to you. You need to pay attention because most of us human beings have a tenuous or fearful relationship with authority figures. There is no greater authority figure in our lives and no bigger boogeyman than the IRS. Sometimes when we get a phone call, somebody saying that they’re from the IRS. We get an email somebody is impersonating an agent at the IRS, we go into, “What did I do wrong? What happened? How do I fix this?” We go into panic mode. We don’t go into fight mode. We go into flight mode.

Scams By Phone

We need to know the truth from the error here. We need to know the truth of what’s happening. You can count on that from me, my show, our Facebook lives, The Truth You Trust series etc. Let’s start at the beginning. First of all, many of you may have received a phone call. It’s a daunting phone call, a cold phone call saying they’re representing the IRS, number one. Number two, they give you a phone number and demand that you call back to make arrangements because you owe taxes or fees. Sometimes their language is sophisticated. It’s not just you owe back taxes but there has been a change on your most recent tax returns and now you owe taxes. They’re playing the game that the IRS in truth sometimes does. They send a letter and say, “By the way, there have been adjustments. You need to account for this. You owe more taxes.” These fraudsters are taking that exact same attack but they’re going to do it from a phone call.

They say that you owe taxes, fees or more importantly, late fees or charges. If you don’t pay, depending on the language, they’ll say that the offense is so egregious or that you are far behind that if you don’t pay, you risk arrest. Sometimes they will ask you to key in either the last four digits of your Social Security number or all your Social Security number. This is important. They will say, “In order to make sure you comply, we will suspend your Social Security benefits.” They have leverage over you. Notice if they’re talking about Social Security benefits, many times these fraudsters are going after our elders and wise ones. If they’re attacking the senior markets then there may be even more fear or panic. A commentary, the Gen Zs are more likely to fight against the man than the Baby Boomers. Listen for the language.

What’s the truth you can trust? Number one, the IRS nor the Social Security Administration is going to ever suspend your Social Security benefits. That is a right earned. The real IRS may tax Social Security benefits based on certain things but they’re not going to suspend them. Number two, it has been 50, 60 years since the IRS has arrested somebody without a trial first. Normally, the real IRS is going to go through a legal process, including filing a judgment or a cause of action against you, calling you to defend yourself and then only if found guilty will engage an arrest warrant.

Never provide your personal information to someone who claims to represent the IRS over phone. The IRS does not communicate via phone. Click To Tweet

No one is going to arrest you, especially the folks who are leaving this message on the phone. They will not arrest you or threaten to arrest you. IRS will not do that. They come through legal channels. The old Wesley Snipes where he was arrested for failure to pay millions of dollars in taxes. The problem is he went through a several-year litigation process before that occurred. There’s not going to be any arrest for you. They will not threaten to arrest you and the IRS doesn’t say, “Please surrender yourself for arrest at your local sheriff’s jail.” It’s not going to happen.

Next, you are never ever to provide your personal information over the phone. You don’t leave it on a recording. First of all, if they demand a callback, you’re not going to call back. It’s nonsense. The IRS does not communicate via phone. The real IRS will send you a letter. That letter will have instructions for you to follow including, “You owe these taxes. Please call our numbers so we can make arrangements for payment.” You’re never going to get a phone call from them. You’re going to get a letter through the USPS, United States Postal Service. If you owe taxes, you’re going to receive this correspondence by mail first. If you do owe taxes and receive a bill from the IRS, it’s going to have a contact or a link to pay through a US Treasury website. Not even an IRS website. It’s a US Treasury website.

Scams Via Email

This leads us to the next. I said you’re going to get all your communication through the mail from the real IRS. The next scam out there, the next phishing scam is that you might receive an email that supposedly comes from the IRS. They may look like a legitimate logo. First of all, carefully read anything you receive for grammatical errors, spelling and typos. If it sounds like it’s a foreign translation into English, guaranteed it’s a foreign translation into English because the perpetrators are all over the world. It could be a source from the United States but many of these scams do not. They come from Eastern Europe, North Africa or the Far East.

Also, look in the web browser. If there is a website they send you to, it should say IRS.gov and then whatever subsequent page is after that, it should be HTTPS for secure. If it’s just HTTP, it’s likely not the IRS. It’s got to say IRS.gov. It can’t say MakeAPayment.gov/IRS because that can be anybody. It’s got to say IRS.gov and then any subsequent page with an HTTPS. The S stands for a secure site. Also, these emails may invite you to click a link to file your return or ask for a refund. Sometimes they’ll ask you and say, “If you would like it overnight, please pay a COD fee, a Collect On Delivery fee.” It’s like, “Send us overnight for $27. We’ll overnight your refund to you.” Do not pay for anything before services are rendered. That is a complete bunk and part of the con.

AYF/GF 129 | Tax Scams

Tax Scams: There are fraudulent tax repairs who will have your returns sent directly to their accounts, and you have no power over that.


They may go as far as asking for you to register a password. We do not do passwords online. There is an SSA social Security Administration. You can have a password as part of accessing information about your retirement funds, your Social Security funds. IRS doesn’t ask you through an email to register for a site. Once you’re on that fake site, they’re going to ask you for information, which they’re going to use to run their scam. Be very careful if it doesn’t say IRS.gov. It can’t say MakeAPayment.com/IRS/gov. That is not a real site. What you need to know is that IRS doesn’t text and email you. They will not contact you via social media. They will not call you.

Fake IRS emails have legitimate IRS notices. Meaning it’ll say something like “IRS important notice.” If you open up an IRS notice, it’ll say, “IRS important notice,” in the letter that is sent to you. In email, they’re just copying that language to appear legitimate. You can go to the IRS and take a screenshot of an IRS logo and make one yourself. It may look like a legitimate IRS logo. It is not associated with a legitimate IRS communication with you.

Be careful that if you click a link in that email, even to just go test it, less so for Macintoshes but very much for Windows computers, it may load malware tracking software. The worst game of all, the IRS notice may lead you into hostage-ware where they take over your computer and you have to send them $100 or $1,000 for them to give you back your computer. We got to wipe everything. If you don’t have a backup, you are in a very bad place. It’s vital that you do not click a link inside of those emails.

The Long Game

This is the long game I started out with. First of all, there are fraudulent tax preparers. They will hang out a shingle and collect all of your information. One of two things, they will help you file but they will redirect and change the account number for your refunds to be deposited into. If they are filling out the software that may be fraudulent software, be careful. There are fraudulent tax preparers who will have your returns sent directly to their accounts and you have no power over that. Number two, there are fraudsters who will file a tax return claiming that you make let’s say $900,000 a year. It looks completely legit. They’ve got the Schedule C. It has all your income and expenses from your LLC or whatever. They fill out taxes and file those taxes.

Why would they do that? Why would they go through that entire mess? If they have access to your name, Social Security number, date of birth and your other identity information, they can then use those taxes that you file and do full documentation loans in your name using those tax returns as the proof of point. The proof documents are these fakes returns. They may ask for a $100,000 line of credit and then say, “Here are my taxes. Here are my financials,” and prove up all of these documents and then get a loan in your name using those tax returns. That is a wicked-long game.

The problem is that only building your PB ID so that there’s only one version of your name that the underwriting software recognizes and making sure that you are up to date on your current taxes. If they can go two years filing in your name and you haven’t filed taxes to throw up a red flag, “Hold it, this person says they make $200,000. The same person says in the same year they made $900,000,” that’s where they’re going to find out there’s a problem. The IRS will reach out to you and say, “Pick a return.” That’s when you’ll know.

True story, we’ve had it happen several times over the years. One of our clients went through this process, called up and said, “I just filed my back taxes and got this letter. Please look at it.” The IRS letter got mailed. It wasn’t an email or a phone call. The IRS letter came in and said, “You have two sets of tax returns that cannot be reconciled at our offices. Please call this number. Fraud may have been perpetrated in your name.”

If you know the rules of the tax fraud game, you can better protect yourself and your loved ones. Click To Tweet

They made the phone call, spoke with a legit IRS rep and were able to disavow and get rid of the other tax returns before someone had seasoned them long enough to do more damage by filing an application in their name. This is bad juju. We have got to stay vigilant, create clarity and be up to date in keeping the databases with one version of our identity so that everybody knows how much we’re making through the FICO Falcon fraud detection software, LexisNexis and the IRS. While the IRS database does not link with these other databases, it is proof of point.

A little while ago, we did a filing your taxes, getting a mortgage and doing what’s called a 4506-T. T stands for Transcript and 4506-T is the IRS form that you can sign, which allows a lender to at any time request a transcript of your taxes. Many lenders will look at a fundable profile and lend it to you via that profile without pulling your taxes. Do know the difference. In this client’s case, there was not enough time. They caught it. The client was able to get hold of the IRS and clean this mess up before the fraudsters were able to file for credit using that fraudulent tax return.

It is a con. The beautiful thing is if you know the rules of this game, we can protect ourselves and our loved ones. We can make sure that we minimize, if not completely eliminate, the risks of borrowing other people’s money. Stay vigilant. Take care of each other. It’s always a pleasure to take on these particular issues so we can all level up and be prepared to take better care of ourselves.

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