VA is committed to protecting Veterans and their families from tax fraud. Follow these tips to avoid being scammed this tax season. You should know how to recognize scams when working with tax preparers.
One common scheme involves ghost tax preparers. These are individuals who you pay to prepare your tax returns, but they knowingly fail to sign the return or include their “Preparer Tax Identification Number or PTIN.” This practice is illegal under IRS regulations for paid preparers.
How the scam works
- Failing to sign the tax return as your tax preparer.
- Inventing information to boost the taxpayer’s refund amount.
- Promising large or quick refund amount.
- Demanding cash-only payments without a receipt.
- Committing identity theft.
- Stealing refunds by directing the taxpayer’s refund into their own bank account.
Why you are at risk
When a ghost preparer is involved, there is no official trace of their involvement. Because of this, the taxpayer is ultimately responsible for all information submitted on their tax return. If the IRS audits the tax return and finds it to be fraudulent or incorrect, it may assess legal penalties and charge interest to the taxpayer.
How to avoid ghost tax preparers
The IRS and consumer protection agencies recommend taking the following precautions to avoid falling victim to this scam:
- Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to find a qualified professional.
- Verify their credentials: Ensure the preparer has a valid PTIN.
- Review your return.
- Ensure refunds go to your account.
- Get a receipt for their services.
If you suspect tax preparer misconduct, you can report it using IRS Form 14157-A.
Verify VA communications
As scams targeting Veterans become more sophisticated, you should learn how to distinguish between legitimate and fraudulent VA communications. Scammers often pose as a VA or other government agency representative to steal personal information or defraud you of your benefits.
- VA will never send text messages to confirm or request personally identifiable information (PII) or Social Security Number (SSN) for benefits or federal payments.
- Do not provide personal banking or credit card information to anyone alleging affiliation with VA or other federal entities.
- Never share your VA National Call Center (NCC) personal identification number (PIN) with anyone, including family, friends or any individual who makes contact by phone, text or email.
Safeguard your data
The tax filing season has increasingly become a prime opportunity for scammers to exploit unsuspecting taxpayers through phone calls, emails, texts and social media.
- Beware of extortion or ransomware threats. Scammers may threaten to destroy files or data if they do not receive payment or banking information. Do not respond to these threats; report the incident immediately.
- Protect against identity theft scams. All three major credit bureaus (Equifax, Experian and TransUnion) offer Veterans free credit freezing. A credit freeze allows you to control who has access to your credit reports and requires your approval for new credit or loan applications.
If you encounter a tax scam, you should report it to the appropriate authorities. For more information, or to report an abusive tax scheme or a tax return preparer, visit Report a tax scam or fraud. If you have experienced fraud, you can find resources to file a report at vsafe.gov or by calling 833-38V-SAFE.
For more tax filing resources, visit Veterans tax information and services at the Internal Revenue Service.