5 Top Tax Scams and How to Avoid Them

By Kaleem Ulah

October 24, 2023

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Many personal and financial information published online during this time of year makes the internet a refuge for thieves. These criminals are doing everything in their power to make the most of the opportunity that tax season presents. They are experts at manipulating people's social interactions. Therefore, at this time of heightened possibility of having your personal information exposed, taking precautions to utilise the internet without putting yourself in danger is of the utmost importance.

Remember that the information you provide about yourself is comparable to money. Tax identity fraud and ATO impostor scams are popular methods for identity thieves to commit fraudulent activity throughout tax season. You can avoid falling victim to identity theft by using discretion when exchanging personal information, submitting your tax returns early, and confirming that you are interacting with the Australian Taxation Office.

5 Top tax scams you should know

You should learn to avoid tax-related scams because it can cost you a huge sum of money. Here are common tax scams you should know to avoid them

Top Tax Scams You Should Know

1. Refunds Scams

Swindlers may contact you via phone call, email, or text message, claiming to be from the Australian Taxation Office (ATO) and offering a tax refund in exchange for personal information. These phone calls, emails, and text messages are frequently poorly written, may contain grammatical errors, and often come from someone in another country. Do not click on links or supply personal information if you receive an email or text message from someone purporting to be from the ATO. They may be trying to steal your identity, therefore, you need to protect yourself from them.

2. Phishing

Phishing is a type of online fraud in which con artists try to steal your financial information by tricking you into visiting a bogus website or responding to an email that looks official. In many instances, the phishing emails will ask for your particular personal information or attempt to persuade you to click on a link that will install spyware or other malicious software on your computer. If you get an unsolicited email that looks like it came from the ATO, you should forward it to the tax office immediately so they can investigate it. Be wary of emails that pretend to come from individuals or businesses and seek personal or payroll information. When in doubt, one should always presume that it is a hoax.

3. Phone Frauds

Callers who pretend to be from the ATO typically tell their victims they owe money and then threaten to arrest them if they do not pay it promptly. Scammers will use fictitious names and badge numbers from the ATO and "spoof" or imitate the toll-free number that they use to give the impression that the ATO is calling. Calling the ATO is the best course of action to take if you receive a call from someone who says they are calling from the ATO, but you are unsure whether or not they are legitimate agents of the agency.

4. False Representation

Swindlers might contact you while posing as government workers and say they need to 'repair' your myGov account because it has been put 'on hold.' Be wary of these calls. They will send you to a bogus website to gain your username and password, update your personal details (such as your bank account) on the legal myGov website, and either attempt to steal your superannuation or file fraudulent tax returns.

5. Donations to charitable causes

Fraudsters frequently create bogus websites or profiles on social media platforms, posing as charitable organisations and pleading for financial support in the guise of a donation request. However, rather than going to charity, the money you provide will end up in the pockets of the con artists. In addition, they frequently collect essential information about your personal identity and the data of your credit card, making you a target for future scams or credit card fraud.

7 Tips to avoid being a tax scam victim

You definitely do not want to be a tax scam victim this tax time. Follow these tips to be on the safer side.

1. Don't give up any personal information on the internet

Scammers put in a lot of effort to steal your personal information, but millions of people live their best online, so sometimes they don't even have to! Always use caution with the information you post on social media and other apps, and under no circumstances should you ever reveal your Social Security number, myGov password, or bank account information.

You should also leave your tax filing number (TFN) off your CV; instead, you should wait to provide it to your employer after you begin working for them. Be wary of online posts that ask you to submit information that appears to be safe, as this is another method of deception. An excellent illustration of this would be if someone asked you your "superhero name," which consists of your pet's name and the street you grew up on. Using these details to access your accounts and acquire information about you is possible.

2. Always keep your electronic devices updated

Updates to your device can be a nuisance, and they always seem to take place at the most inconvenient times. However, they are necessary to maintain your device's level of safety. Updated devices are more difficult to hack and contain recent features that can recognise and isolate viruses or malware designed to cause damage or collect data.
The best way to ensure that your phone runs the most recent software is to restart it at least once every seven days. Additionally, it can assist in preserving the general functioning of your gadget. The Cyber Security Centre of the Australian Competition and Consumer Commission is a wonderful location to visit if you want to learn more about securing your information and devices.

3. Investigate your accountant’s security measures

Many taxpayers choose to deal with accountants or accounting firms rather than use well-known tax platforms to do their electronic tax files. Scammers are now going after tax professionals as a new target demographic. You should inquire about the methods the accountant uses for backing up data, securing it, and protecting it from unauthorised access. You should also ask about the safety measures to protect the office.
It is best practice for accountants and accounting firms to request that clients upload files to a secure platform or utilise an encrypted file-transfer technology such as Adobe or Microsoft. Because home offices are becoming increasingly widespread, you should be bold and ask tax preparers about their methods to secure their home Wi-Fi network or whether they use a virtual private network (VPN).

4. Visit a registered tax preparer

Finding a tax preparer is a straightforward process. But before you place your faith in someone, you should ensure they have a good reputation. Going online and doing some research is the best option. Before selecting, looking at customer feedback and considering how long the company has been in operation is important. This can help determine whether or not they are genuine.
In the case of an individual working from home who is not associated with a larger accounting business and needs more information about them online (or no ratings), this could be a red signal. You can verify that the person is who they say they are by asking for their Preparer Tax Identification Number (PTIN). Any paid preparer must have their own. Because the information you provide about yourself is priceless, you should be careful about who you share it with.

5. Be cautious of anyone demanding a share of your return

Tax fraud victims frequently allege that after their returns had been written, signed, and filed, the preparer informed them that the filing was false and demanded that victims hand over half of their refund, or else they would be handed over to the police. This whole thing is a scam. You shouldn't have to worry about someone threatening you. Because of this, it is essential to check the credentials of your preparer before entrusting them with the filing of your taxes. In addition, you authorise this person with your personal information, which puts you at risk for identity theft and falling victim to a con.

6. Use a legitimate website

It is usual practice to submit paperwork online without assistance; nevertheless, before you begin, exercise sound judgment and conduct your homework beforehand. Ensure you're on a reputable website and should not follow a link in an unsolicited email. Clicking on the link could take you to a page that is not what it claims to be. Instead, you should only go to websites with good reputations by manually putting in the URL. This will ensure that you are dealing with a genuine company.

7. Be cautious when answering the phone

To commit identity theft during this time of year, con artists will pose as representatives of the ATO and try to trick unsuspecting victims into giving up their personal information. If you get a call from someone who says they work for the ATO, hang up the phone and call the ATO immediately if you have any questions or concerns. Taxpayers will not get unsolicited phone calls from the ATO. They exclusively correspond with one another through the mail. Don't give in to this temptation.

Other tips

  • Under no circumstances should you click links in unsolicited emails or text messages. Contact the ATO or your accountant immediately to confirm that the communication you received is legitimate.
  • Under no circumstances should you reveal sensitive information such as your credit card number, Tax File number, login, or password to anyone you do not know or who you do not trust.
  • Make use of a strong password in conjunction with two-factor authentication.
  • Never reveal your two-factor code to another person. Your accounts will be more secure against unauthorised access due to this.
  • Under no circumstances should you complete a transaction or payment over the phone with a party you did not initiate contact with.
  • Donate money only to organisations that are known to be trustworthy and legitimate. If you doubt the organisation's legitimacy, look into the Australian Charities and Not-for-profits Commission registry.

Conclusion

This guide has discussed major tax scams and how you can avoid them. Tax season is already stressful. It will be unfortunate to get involved in the scams again. Be cautious and ready to contact ATO whenever you notice a suspicious move. Also, as stated above, only deal with registered tax preparers to be on the safer side. If you need a certified tax agent in Australia, The Kalculators is the right scam-free agency you can try out. We are an accredited company that offers financial solutions and tax-related services. Do not be scared to hire us; we work by the tax rules and regulations.

Frequently asked questions

You can file a report with ScamWatch if you receive an SMS or email that seems to be from myGov but contains a link or appears fraudulent. You can call Services Australia's Scams and Identity Theft Helpdesk at 1800 941 126 if you have submitted your personal information or clicked on a link that leads to a fraudulent website.

Can scammers use fake ATO phone numbers or email addresses?

Scammers may employ technology to display real ATO or Australian phone numbers in the caller ID or call log of the victim's phone. Normally, when you contact the ATO, you won't be able to see your caller ID. They will appear on your screen as having No Caller ID. When you call, please only use a number you found yourself. Do not call the number that appears on your caller ID or in your call history.

How does the ATO typically communicate with taxpayers?

The ATO approach is always different from the scams, so you should always be on the lookout and remember the following.

  • Never in history will ATO threaten you with swift arrest.
  • They will never ask you to wait in the queue while they collect payment for a service.
  • They will never send pre recorded messages to your phone unless you specifically ask them to.
  • Before supplying any information, you should ensure that the organisation you're dealing with is reputable. Put the phone down if you are unsure.
  • The ATO would never make it difficult for you to discuss your financial matters with a professional financial advisor or tax agent.
  • A conference call with a third party, such as your tax agency or police enforcement, is not something that will ever happen with the ATO.
  • They will never ask for payment of a debt using vouchers such as iTunes, Google Play, STEAM, or any other service.
  • They will never come after you for payment of a debt with a gift card to JB Hi-Fi, Myer, Woolworths or any other retailer.
  • If you owe money to the government, the Reserve Bank of Australia manages the only bank account into which they will accept payment. Make sure that the Bank-State-Branch (BSB) number belongs to the Reserve Bank of Australia by checking online.
  • They will never urge you to pay a tax debt by making a cash withdrawal from an ATM that does not require a card.
  • They won't even consider paying for debt through an international wire transfer.
  • They will never require you to pay through cash delivery under any circumstance.
  • You will never be required to pay a charge to obtain a refund from them.

Are there specific red flags for tax scams over the phone?

Yes, there are. Let’s go through some things con artists might do. Con artists might:

  • Insist that you pay immediately, keep you on the line until you do, and threaten to put out a warrant for your arrest if you hang up.
  • They will utilise these threats to get you to pay before the call is over.
  • Scammers might not let you speak with a reliable advisor or your usual tax professional if they want to take advantage of you.
  • They take these measures to ensure that no one can warn you about the con and convince you to stop making payments.
  • Scammers could try to set up a conference call with a phoney tax expert, law enforcement officer, or other authoritative figure.
  • They do this to make the call seem more legitimate and heighten your anxiety level, but the second person on the line will be another con artist.
  • Scammers may demand payment in Bitcoin or another cryptocurrency, either sent to them directly or deposited into an ATM on their behalf.
  • This currency is harder to trace and provides greater anonymity than other forms of payment.
  • Scammers may ask you to deposit money into a personal bank account that they have set up. It's possible that con artists in Australia set up this account to steal your money. Before it is sent overseas, the money is moved between various accounts.

What should I do if I receive a suspicious call from someone claiming to be from the ATO?

If you receive a suspicious call. call the ATO toll-free number, 1800 008 540, to file a complaint if you believe you may have been the victim of a phone scam and that you may have fallen for the con and sent money or other sensitive personal identifying information to the con artist.

  • File a formal report with the authorities in your area.
  • Contact the bank you paid to and file a fraud report if you provided the con artist with your credit card or bank account data.
  • You should contact your bank or another financial institution.

Even if you did not hand over any money or sensitive personal identification information to the con artist after receiving a phone call from a potential fraudster, you must still report the incident to them. You are welcome to use their online form to report fraud.

Are there resources available for reporting tax scams in Australia?

Yea, there are several options of reporting scams in Australia. We have discussed the phone scam above, let’s check the email and text messages scam.
Email and text message

  • Do not open attachments, click links, or download anything if you believe you have received a phishing email or text message.
  • Call the ATO’s toll-free number at 1-800-008-540 to confirm the incident if you sent the con artist money or provided them with sensitive personal identifying information.

Additionally, you need to:

  • Create a formal report with the authorities in your area.
  • Contact the bank you paid to and file a fraud report if you provided the con artist with your credit card or bank account data. You should contact your bank or another financial institution if you do this.
  • Even if you did not provide the con artist any money or sensitive personal identifying information, you should still report.

You have the option of:

  • Send the full email to the ReportScams@ato.gov.au email address, take a screenshot of the SMS, and send it to the ReportScams@ato.gov.au email address.
  • After you have informed the ATO of the problem, delete the email or text message.
  • ScamwatchExternal Link is the organisation to which you should report various sorts of fraud, while the Australian Cyber Security CentreExternal Link is the organisation to which you should report cybercrime.

Social media

Recently, the ATO is aware of multiple profiles on social networking platforms pretending to be them. If a social media account pretending to be the ATO contacts you, you should ignore it and not interact with it in any way. Take a screenshot of the account or post, and send it to ReportScams@ato.gov.au along with the screenshot.

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About the Author / By Kaleem Ulah

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Kaleem is CEO & Author at "The Kalculators". With more than 10 years of experience in financial services, He built Kalculators to transform your financial challenges into strategic triumphs!

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