Tax season is in full swing.
As I’ve alerted you, Americans have a reprieve this year.
Tax Day 2021 has been postponed to May 17.
That means you have more time both to file… and also to figure out how to make sure you’re not paying US$1 more than you have to.
My guide to managing your tax obligations as an American living or investing overseas is available here… at a special 67% savings off the usual price.
You need this help. I want to make sure you get this help. Thus the discount (which I appreciate my publisher—yes, it helps that she’s also my wife—agreeing to make available).
Note that my Taxman’s Guide comes with a special report on the new expat benefits and challenges resulting from Trump’s Tax Reform Act.
All of that is important… but it’s not actually what I’d like to talk to you about today.
You see, the tax collectors won’t be the only ones busy this filling period.
Con artists’ activity drastically increases this time of year.
These guys know that taxpayers are under pressure to report their taxes correctly and on time, and they’re looking to exploit that.
These scammers are very successful. The IRS reported US$1.8 billion of tax fraud during the last year.
I was shocked to hear that figure. First I thought of my mother and my mother-in-law. Older women on their own are especially vulnerable. And, indeed, my mother-in-law was the victim of identity theft related to her tax return last year.
Then I thought of you, dear reader. I want to make sure you are aware of this danger, as well.
Here are some of the most common scams circling around.
Be Careful Who You Talk To
The most common ploy involves a phone call from “the authorities”—the IRS, the police, the FBI, etc.
Scam artists then threaten anything from arrest to deportation if you don’t wire the “remaining” taxes owed to the provided bank account.
In the course of the exchange, it’s common for victims to hand over sensitive information like credit card details or other personal information, for perpetrators to abuse.
Another typical scam involves phishing.
Here, fraudsters use social media, email, and text messages to contact taxpayers, posing as a legitimate institution.
The trick, again, is to convince you to share personal information or credit card details.
Moreover, these exchanges often include a compromised link that, when clicked, installs malware (software that secretly steals your data) on your device.
Scammers also pose as accountants promising unrealistic tax refunds.
That’s a strategy that works well with retirees, low-income individuals, and non-English speakers who might not have a long-standing relationship with a tax advisor.
Even if you’re working with a legitimate accountant or advisor, they could have their data breached and your information stolen. Almost two dozen tax advisors have reported this happening since the start of the year, so make sure yours has the right security precautions in place.
Here’s How To Protect Yourself
Here are a few simple rules to follow to protect yourself from becoming a tax-fraud victim.
First, never give out personal information to a stranger over the phone. Period.
Furthermore, beware if the IRS calls you by phone or sends you an email. The agency primarily uses regular mail to contact taxpayers. It would also never call to request credit card details or personal information, threaten repercussions, or discuss unexpected refunds.
You must also take care when an “IRS” message contains suspicious links or attachments. Do not click on those if you’re not sure what’s behind them.
Finally, when working with a new tax advisor, do some background checks first. Check their license status and if they have a history of disciplinary actions. You can get that information on Better Business Bureau’s website, your state’s Board of Accountancy for CPAs, the IRS’ directory for enrolled agents, and your state’s Bar Association for attorneys.
Happy tax season.
Editor, Offshore Living Letter