Tax Scam Alerts
Unemployment Identity Theft
Many states have experienced a surge in fraudulent unemployment claims. The IRS has issued helpful guidance on how to identify and report unemployment identity theft. If you believe you have become a victim of identity theft, report it immediately.
Taxpayers who received 1099-G forms for unemployment benefits, but never filed for or received unemployment benefits during the 2020 calendar year, should report a fraudulent 1099-G to the Vermont Department of Labor and request a corrected form.
Identity Protection Pins (IP PINS)
If you are concerned that your personal information has been stolen, you may request an Identity Protection Pin (IP PIN) from the IRS to protect your identity when filing your federal tax return. Using an IP PIN prevents anyone else from filing a tax return using your Social Security number. Get your Identity Protection PIN (IP PIN) by visiting the IRS' website.
Types of Fraud
Identity theft and fraud are two terms that are used often—and sometimes interchangeably. However, there are a few key differences between the two crimes.
Identity theft happens when personal information, such as your name, Social Security Number, and other identifying information, is stolen from you. This can result from a data breach, an email or phone scam, or even when someone steals your wallet containing your driver’s license. Using stolen identities to commit tax refund fraud is a problem across the U.S., and members of our staff at the Vermont Department of Taxes work hard to prevent this type of criminal activity in Vermont.
Criminals use the identities they steal or fabricate to commit fraud. Fraud occurs when a thief either creates a person who does not exist with fabricated personal information or obtains your personal information to commit crimes, such as schemes to steal other people’s money.
Tax Refund Fraud
Criminals will use stolen personal information, such as your name and Social Security Number, to file false tax returns. They use the identifying information they have obtained illegally to file a tax return in your name and claim the refund that rightfully belongs to you.
The Department of Taxes has a rigorous process, sophisticated data processing systems, and specially trained staff dedicated to the task of detecting and preventing tax refund fraud. Tax refund fraud is often detected when two people file tax returns for the same year using the same name and Social Security Number.
Scam artists can be creative and clever as they devise new ways to steal your money. While detecting tax fraud can be time-consuming, diligent monitoring by the Department has prevented hundreds of thousands of dollars of fraudulent tax refunds from going out the door each year and into the hands of criminals. The Department works with the IRS, other state revenue departments, and companies and trade associations in the tax and financial services industries to develop and implement new procedures to help protect taxpayer money.
Debt Collection Scams
Persons who are not authorized by the federal IRS or Vermont Department of Taxes may contact you, usually by telephone or email, and demand immediate payment of tax debt. These criminals sometimes pose as employees of the IRS or the Department, or they may pretend to be an outside collections agency acting on behalf of the IRS or Department to collect tax debt.
Criminals who operate this type of scam are experts in persuasion tactics, often using threats and bullying. If you aren’t sure whether a telephone call or email is real or a scam, do the following:
- Hang up. Do not engage in conversation with the caller over the telephone.
- Delete the email. Do not open any email attachments or click on any hyperlinks.
- Do not give out any personal information until you are certain the call or email is genuine.
Phishing attempts can look like a valid email, but the link takes you to a fake website designed to capture your personal information. The IRS has issued helpful guidance on phishing schemes.