Filing season is open, and so is the season for tax refund scams

March and early April are the busiest weeks of the year for this kind of fraud, and small trade businesses are a favored target, and not because the schemes aimed at them are clever. There is money in motion. There is paperwork nobody deals with the rest of the year. The person handling the books is usually also the person running the crew, reading email in a truck between calls, and inclined to deal with anything urgent quickly so it goes away.

I ran a small shop for a while and got two of these in one season. Neither was clever. Both nearly worked because of when they arrived.

The call that says you owe and must pay today

Someone calls claiming to be from the tax authority, states an amount owed, and applies pressure: a warrant, a license suspension, an arrest, all resolvable if you pay immediately. The payment method is always something irreversible. A wire transfer, a prepaid card, a gift card read over the phone, a cryptocurrency transfer.

The tell is the method, and it is absolute. No tax agency asks for payment in gift cards. It also does not open a collections matter with a phone call demanding same day payment; the process begins with mailed notices, and there is an appeals process attached to them.

The other tell is the emotional shape of the call. Real collections correspondence is dull, dated, and refers to a specific tax year and notice number. Fraud is urgent and personal.

What to do: hang up. Do not press a number, do not confirm any detail, do not call back the number that appeared. If you are genuinely unsure whether you owe something, look up the agency's published number yourself and call that.

The email asking for everyone's W-2

This one is aimed at whoever handles payroll and it works on companies of every size. An email appears to come from the owner, often from a similar looking address or a spoofed display name, asking for copies of all employee W-2 forms or a summary of names, addresses and Social Security numbers. It is usually short, slightly informal, and sent when the owner is known to be traveling or on a job.

The stolen information is used to file fraudulent returns claiming refunds in your employees' names. Your employees then discover the problem when their own return is rejected as a duplicate, which is a bad conversation to have with people who work for you.

The habit that stops it: no payroll data or bank detail leaves the office on the strength of an email alone. Verify by voice, on a number you already have, every time, including when it is inconvenient and including when it appears to come from the owner. Say out loud to whoever handles this that they will never be criticized for making that call.

The preparer who promises a number before seeing the return

A storefront or a mobile preparer offers to handle the business return, quotes a fee as a percentage of the refund, and describes deductions you had not thought of. Some of what they suggest will be legitimate. Some will not, and the return goes in with inflated expenses or credits you do not qualify for.

The exposure is entirely yours. A taxpayer is responsible for what is on their return regardless of who prepared it, and a preparer who declines to sign as preparer has arranged matters so that only your name is on it. That refusal to sign is the single clearest warning sign in this whole area.

Ask three questions before engaging anyone: what are your credentials, will you sign the return, and will you be reachable in September. Anyone paid to prepare a federal return has to be registered with the IRS and has to sign the return they prepared, so someone who will not give you a registration number, or who wants to leave the signature line blank, has answered all three questions at once.

The refund that arrives and then has to be sent back

A more elaborate version, and one that catches people because it starts with money appearing rather than money leaving. A fraudulent return is filed in your name using stolen data, the refund is directed to your real bank account, and then someone calls claiming the deposit was made in error and asking you to forward it on.

An unexpected deposit from a tax authority is not good news. It means a return was filed that you did not file. The correct response is to contact the agency through its published channels, follow its procedure for returning an erroneous refund, and start an identity theft report. Do not send money anywhere on the strength of a phone call, no matter how official the caller sounds.

The business identity version

Less discussed and increasingly common. Someone uses a company's employer identification number to file fraudulent payroll forms, open credit in the business name, or claim credits. Because a business does not have the same monitoring most people set up for personal credit, this can run for a long time unnoticed.

Two habits catch it early. Reconcile every notice you receive against what you actually filed, including the ones that appear routine and the ones addressed to a tax year you have already closed. And check your business credit file periodically, in the same way you would a personal one.

The text message about a refund you did not request

The newest variant arrives by text rather than by phone, and it is effective because it is short. A message says a refund is pending and needs your bank details to release, or that a filing was rejected and needs verification, with a link. The link leads to a page that looks close enough to an official site to pass a glance on a phone screen.

Two structural facts make this easy to dismiss once you know them. Tax agencies do not initiate contact about a refund by text message or by social media, and a legitimate refund does not require you to supply bank details after filing, because those were on the return. Anything asking you to confirm information the agency already has is asking for a reason that is not the stated one.

Do not tap the link even to look. Delete it, and if you want to check whether anything real is outstanding, log in to the agency's site by typing the address yourself or call the published number.

The office habits that cover almost all of it

Four rules, and they are not technical. Nothing gets paid or sent on the strength of an unexpected message, ever, without a callback on a known number. Payment methods that cannot be reversed are never used for anything official. One person is named as responsible for filings, and everything arrives to one address so that a missing notice is noticeable. And every notice gets opened, dated and filed, even the boring ones.

Report anything you receive, whether or not it worked on you. Fraud reports from the public are collected by the Federal Trade Commission, and a scheme aimed at contractors is only recognized as a pattern when enough of the shops it was aimed at say so, which is what makes a warning reach the next one in time.

The season is short and the volume is high, which cuts both ways. Set the rules once in February, tell whoever answers the phone and the email, and the whole category becomes something that happens to you and gets ignored rather than something that costs a payroll run.