4 Tax Scams To Watch Out For And How You Can Avoid Them
The end of the financial year – is the high time to prepare your paperwork and file your taxes. However, taxes also bring along a full sweep of tax scams that can make your life harder. Fraudsters will unquestionably make their move and lay out their traps to scam you. Of course, no one wants to be a scapegoat, especially when it comes to taxes.
For this very reason, we have listed four major tax scams that you should watch out for:
Identity theft
We can bet Sherlock’s deerstalker hat that you’ve watched a couple of detective flicks to know that identity theft is a commonplace thing. While identity theft may seem cool in movies, it can be discerning when you’re the victim, especially when it comes to tax scams. In essence, identity theft occurs when your identity or personal information is stolen or misused. In the case of taxes, this information can be something as simple as your Tax File Number (TFN). It can also include impersonating you, and creating a false or new identity – in a way that can harm you.
So, how do these tax scams work? A majority of the scammers find your information by tricking you into giving it (we’ll discuss this later in the blog) or simply via a breach or a leak. They’ll effectively file this information to execute tax scams like claiming your tax return.
Fake emails
Oftentimes, you might get emails claiming that they can promptly speed up your taxation process with a quick click of a link. These emails may contain colourful, tantalizing tax return offers that require you to fill in your TFN and credit card details. As tempting as these too-good-to-be-true offers may be, they’re tax scams in disguise. One click of the link they send can plant malware into your computer and expose your data to scammers.
What’s more shocking is that these tax scams can lead to links that imitate the official website of the ATO. They might ask you to proceed by entering your private information, or by updating existing information such as licensure, TFN, AUSkey, or other confidential information. This helps scammers steal your identity and successfully pull off tax scams.
Bogus calls from the ATO
When it comes to tax scams, you might often get what you’re compelled to believe are ‘legitimate’ calls from the ATO. Through these bogus calls, you’re either persuaded or threatened to give your information or transfer money. You might get calls that will threaten to “arrest you for tax fraud unless you transfer money immediately”, or persuade you to “pay your tax debt pronto”.
Of course, they’re all tax scams. The ATO has distinctly highlighted some common scamming methods and clearly stated that it doesn’t take up the actions alleged by the bogus calls.
Phony tax agents
Another crucial thing to be cautious of is the involvement of ‘ghost tax preparers’ in these tax scams. These tax preparers usually set up shop during tax time and advertise fast tax returns at supposedly unbelievably low prices. No doubt, it’s a blatant lie. These so-called tax preparers are generally not registered as licensed agencies under the Tax Practitioners Board (TPB), and thus, cannot “charge or receive a fee or other reward for providing tax agent, BAS or tax (financial) advice services.”
One of the ways they carry out tax scams is: they gather your classified information, collecting their fees, and then disappearing. They might also impersonate your real tax preparer by contacting you with an email address that’s similar to your actual agent’s. In the end, you might get tricked into giving out your information to them.
With tax scams shadowing this tax season, you can avoid them by considering the following measures:
1. File early:
The earlier you sort your finances and file your taxes, the sooner you’ll get your tax refund. This way, you won’t have to rush until the end of the deadline to contact a tax agent. So in a sense, you’ll be able to avoid tax scams and stay ahead of the game.
2. Secure your network:
Don’t casually share your information with people over the internet – whether it be via email or the cloud, and ensure that your network is secure. Update your cybersecurity, and only open links and share files with trusted sources.
3. Calls from the ATO:
Before you respond to emails or calls from the ATO, verify if the source is real or not. Don’t forget to note the key things that the ATO has specified regarding their tax procedures, or ask your registered tax agent to look into it.
Conclusion
Doing your taxes can be bothersome, but if you don’t file them early with the help of a registered tax agent, you might be vulnerable to tax scams. Beware of what you share, and to whom.
This information is general in nature and does not take into account personal circumstances and situations.
As a Registered Tax Agent under the Tax Practitioners Board, we, at Lotus Smart, have a dedicated team of proactive, forward-thinking, result-oriented members who have held roles in corporate accounting across Australia and overseas. We provide expert accounting and taxation advice to both individuals and businesses. With over 20 years of experience, we’ll ensure that you’re always getting the best guidance from the most professional company in the industry.
For more information, contact us.