The IRS warns people each year to beware of tax and financial scams that take advantage of unsuspecting citizens. Scammers scare people by calling them and telling them they owe the IRS money and must make an immediate payment to avoid consequences. Then, the scammers run away with the money without a second thought. Although the IRS warns people of these scams, it turns out that one demographic is more vulnerable to these opportunists.
The millennial generation, or people in their 20s and early 30s, are much more likely to fall victim to financial scams, including tax scams, compared to the elderly. A survey of 1,000 American consumers, conducted by First Orion, notes several common themes among scammers. As many as 84 percent of baby boomers received scam phone calls compared to 73 percent of millennials. However, people in the younger generation said they were more likely to give away personal information.
Millennials are six times more likely to give away their credit card information and twice as likely to give out their full Social Security number. That's because 17 percent of respondents who were millennials said they would reveal more information if the caller on the other line had the last four digits of their Social Security number. This figure compares to just 2 percent of baby boomers.
This younger generation seems to have a false sense of security when it comes to tax and financial scams. Just 35 percent of millennials believe they are at risk for identity theft, whereas 54 percent of baby boomers feel as if they can have their identity stolen.
The reasons why millennials feel more secure in their private information probably comes from social media. These younger consumers may fall prey to financial scams because they see sharing information through the internet as the norm. Millennials have a propensity to share personal information, such as birthdays, dinner reservations and current locations, so it's not that much of a stretch to share credit or debit card information when prompted to do so.
Another issue is that millennials may feel as if technology should save them from any missteps. Nearly half of all millennials in the survey believed that their cellphone carrier bears the responsibility of blocking scam calls and telemarketers. Instead, taxpayers should hang up on the caller and then report the issue to the IRS through agency's toll-free number or online portal.
Accountants and tax professionals can help their younger clients avoid tax and financial scams by educating them on how scammers take advantage of vulnerable citizens and how the IRS works to resolve issues. When the IRS makes a phone call to a taxpayer, the person on the other line never demands an immediate payment by credit or debit card. Usually, these payment demands arrive in the mail as official letters as opposed to phone calls. The IRS also offers a long appeals process to resolve any issues before taking any action, so there should not be an immediacy to a phone call.
For taxpayers, a little education regarding tax and financial scams goes a long way. Accountants should also be at the front lines when it comes to averting fraud and scams, as this helps them deliver more value to clients.
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