We received your tax return. Please confirm the following information so we can process your refund.
If you ever received a letter like this from the IRS, you may want to celebrate your coming refund. Unfortunately, it had the opposite impact on me: I had not yet filed a tax return for 2015, so I should not be expecting a refund.
That's when I realized someone filed a fraudulent tax return with my information and social security number. If you are a small business owner, identity theft and tax fraud are increasing and could be problematic for you and your business. Every year, the IRS releases a list of currently prevalent tax scams. Here are 2017’s top seven tax scams and how to protect yourself against them.
1. Phishing. Still the most popular trick because it keeps working. Crooks and scammers send a fake email directing you to a website to enter your information. They then steal your information to either file false tax returns or file false tax refunds. If something does not look right to you, don't click on the link in the email.
2. Phone scams. As a small business owner, my office phone number is readily available. As a result, I receive phone calls from people claiming to be IRS officers. The caller may threaten to have you deported, seize your assets and property, or threaten criminal prosecution and a variety of other things. If you receive a phone call from the IRS and it doesn't sound right to you or they're trying to receive information from you, hang up and call the IRS back by going to the IRS.gov website to find more information and then see if actually you were called. The IRS doesn't normally call you. If it's a first time, they will send you a letter in the mail.
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3. Identity theft. It is important to be aware about identity theft during tax time. I felt violated when it happened to me. I received letters from the IRS and from the state that I filed tax returns asking me to confirm whether I filed the tax returns. The IRS aggressively pursues criminals that file fraudulent tax returns using somebody else's Social Security number so contact them if you may be a victim of identity theft.
4. Return preparer fraud. One of the biggest problems that reputable tax return preparers like myself and others is the number of unscrupulous tax preparers who mislead tax payers. These tax preparers try to encourage tax payers to falsify expenses and deductions so they can receive credits they may not be entitled to.
5. Fake charities. Some scammers pose as a fake charity so you can donate money with the hopes that you can get a tax deduction for your donation. You should receive a receipt after your donation which you must keep for supporting documents. Visit the IRS.gov website and search for eligible charities that have been registered with the IRS that allows you to get the tax deduction for donating funds to that particular charity or for any contributions.
6. Inflated refund claims. If you're a taxpayer, beware of any tax preparer who offers you inflated refunds, including those who promise to get you a large refund or ask to be paid based on the size of your tax refund. People who are either CPAs or enrolled agents are required by law not to get paid on contingency.
7. Falsely padding deductions on return. Taxpayers should avoid the temptation to falsify deductions or expenses on their tax return in order to pay less than they owe or to receive a larger refund. It's never worth it. The extra $100, $500 or even $1,000 you may receive is never worth the effort and the headache you would get if caught by the IRS. If caught, you and the tax preparer may be subject to interests and penalties.
It's imperative for you to pay close attention and not put yourself in those situations so you can continue running your business and not worry about getting scammed.
About Ebong Eka
Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective to small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.
Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan.”
Bank of America, N.A. engages with Ebong Eka to provide informational materials for your discussion or review purposes only. Ebong Eka is a registered trademark, used pursuant to license. The third parties within articles are used under license from Ebong Eka. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.
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