Common Tax Scams
Common tax scams hit hundreds of Australians every year around tax time. In fact, according to Scamwatch, scammers cost Australians $489 million in 2018!
Tax scams are a major problem for individuals and businesses around Australia, with many people falling victim to fraudulent emails, phone calls and text messages, identity theft and more each year. Scammers claim to be from reputable organisations, pretend to be registered tax agents or even claim to be from the Australian Tax Office (ATO), using convincing language to fool individuals into handing over personal information and money.
The best way to protect yourself and your finances against these common tax scams is to be aware of them and understand how they work. This will allow you to quickly identify and report any suspicious correspondence you receive. Keep reading to find out what the most common tax scams are and how you can protect yourself against them.
Common Tax Scams: Fraudulent Tax Preparers
Every year during tax time, many individuals and businesses choose to employ the services of accounting firms for their annual tax return submission. Scammers know this and use it to their advantage, posing as tax preparers and tax services providers in order to fraudulently obtain personal information.
A common tax scam that occurs sees scammers portray a tax preparer or accounting service provider, and then charging or requesting from their customers an upfront fee. They usually stipulate that this fee is to cover their tax return services, but once an individual has paid this fee and fallen for the trap, the scammer will disappear – taking your money with them!
Some scammers collect your personal information and sell it to other malicious entities who can then conduct other fraudulent activities, such as credit card fraud or identity theft. Personal information can even enable scammers to intercede your tax returns and receive them in your stead.
Common Tax Scams: Phishing
Phishing is a very common tax scam that occurs year-round to thousands of people. It is not unique to tax time, but phishing is an issue that many businesses and individuals have to deal with during tax season.
Phishing can be in the form of fake emails, advertisements, text messages and even whole websites. Typically, the goal of phishing scams is to collect personal and financial information about a person or business, and then use this information to steal their money, or sell this information to other scammers and unscrupulous characters. Scammers will often pretend to be from a reputable organisation and mimic them in order to gain your trust and help convince you to provide the information they need.
This type of common tax scam is especially worrying because scammers usually mimic organisations like your bank, your accountant or accounting firm and even the ATO. This makes it easy to fall for the scam and unwittingly provide you information to scammers.
Scammers who use phishing techniques can also remotely install malicious software on your computer or laptop by getting you to click on a link they sent in a fraudulent email or text. A convincing email or text will persuade you to click on the link, which then installs viruses or hostile software on your computer, which can provide access to your stored data, information and personal files.
Common Tax Scams: Small Business Scams
Small businesses are often the target of common tax scams, especially around tax time. These scams can be in the form of phishing emails, texts or phone calls, which can be sent to anyone in the company.
A very common tax scam that small businesses experience is receiving a bill or invoice for so-called services that were provided to your company by another organisation. Around tax time, these falsified bills and invoices usually refer to tax services rendered to a business and can even threaten a small business with a loss of their returns if they do not comply.
How to Protect Yourself Against Common Tax Scams
Scammers are getting smarter and more crafty every year, changing and improving their methods to rob you of your personal and financial information. Technology has made it easy for scammers to contact and harass you, and even easier to obtain private information. The best defense any business or individual has is awareness and good habits. Here are some ways you can protect yourself or your business from common tax scams:
- Protect private information such as your full name, your date of birth, your tax file number, your current address, banking and financial details and even your drivers license details. This information can provide scammers with the ideal gateway into your life and make stealing your information, and your money, even easier.
- Treat requests for personal information with suspicion, as not all requests are legitimate. Even if you receive an authentic-looking request from a service provider you recognise, such as your bank or tax accountant, be cautious and ensure you are dealing with the legitimate organisation before providing any personal information or clicking on any links contained within the email.
- Ignore requests for payments sent on email or via text message before validating them.
- Avoid sharing too much information on social media or other public platforms. This will protect you from having your personal information stolen and prevent you from being a victim of identity theft.
How to Handle Common Tax Scams
If you have been scammed or suspect fraudulent and illegal activity, the best way forward is to report the incident with as much information as possible. The ATO has dedicated points of contact for people who need to report scams. Reporting suspicious emails, texts or phone calls can help stop scammers and helps create awareness around this growing problem.
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