How to Recognize a Fake Tax Agency and Protect Your Finances

The field of tax consulting attracts fraudsters who create fake agencies to deceive citizens and businesses. Criminal schemes include fictitious VAT refund services, false tax consultations, and scams with tax refunds from abroad. Victims of such schemes lose money, personal data, and face financial risks.

Tax Refund Fraud Schemes

Fraudsters use various methods to mislead people. The main schemes include:

1. Fake tax consultations. Disguised as professional accountants or lawyers, scammers offer help in getting tax refunds. They demand upfront payment for services but cease communication after receiving the money.
2. Deception with tax agencies. Fake firms promise quick tax refunds but require personal and banking information. This information is then used for theft or fraud.
3. VAT refund scams. Fake companies offer businesses "legal schemes" for VAT refunds. As a result, entrepreneurs lose money and may face tax claims.
4. Overseas tax refund scams. Victims are told about supposedly due compensation but are required to pay a fee or provide bank account details to receive it. Consequently, funds are withdrawn without any refund occurring.
5. Tax payment scams through fake websites. Phishing sites mimic official tax service portals. Data entered on these resources is used for fraudulent activities.

These schemes target both individuals and entrepreneurs, so it's important to verify tax consultants before collaborating.

How VAT Refund Scams Work 

VAT refund is a complex procedure that fraudsters profit from by offering "simplified" methods. Their schemes include:

1. Creating a fake tax agency with a convincing website and reviews.
2. Advertising quick VAT refunds.
3. Requesting upfront payment for "legal support."
4. Using shell companies for fictitious operations.
5. Disappearing after receiving money or passing client data to third parties.

Some fraudsters forge documents and require clients to sign papers that lead to tax violations. As a result, the person not only loses money but may also face problems with tax authorities.

Often, scammers promise VAT refunds even to those who are not entitled to them. In such cases, the victim themselves may fall under suspicion by the tax service if the fraudsters file documents on their behalf.

How to Verify a Tax Consultant

Before using the services of a tax agency, it is important to ensure its reliability. Verification includes several steps:

• Reviewing registration data. Reliable companies have tax identification numbers, state registration numbers, and a legal address that can be verified through state registers.
• Checking the website and contacts. Official agencies use corporate email and provide real contact details. A lack of information about the company is a reason for caution.
• Analyzing reviews. Fake agencies post false positive comments. It is worth looking for independent reviews on third-party platforms.
• Refusing advance payment. Reliable consultants work on a contract basis and do not require advance payments without a guarantee agreement.
• Personal meetings. Scammers often avoid personal meetings and communicate only online. An office in an accessible location reduces the risk of encountering scammers.

Carefully checking a consultant will help avoid financial losses and problems with tax authorities.

Signs of Fraudsters in Accounting

Fake tax agencies can be recognized by the following signs:

1. Lack of official documents, licenses, and registration numbers.
2. Use of free email services instead of a corporate domain.
3. Promise of unrealistic tax refund amounts.
4. Pressure on the client to urgently sign a contract.
5. Demand for full upfront payment without guarantees.
6. Concealing the legal address and real company details.
7. Inconsistencies in company data across different sources.
8. Conflicting information about tax refund methods.

Some fraudsters also use fake IDs or impersonate tax service employees. This is another reason to check their credentials before handing over personal data.

Conclusion 

Tax refund fraud involves fake agencies, false tax consultations, and VAT refund scams. Criminals use shell companies, phishing sites, and fictitious promises to take victims' money. Verifying a tax consultant, refusing advance payments, and being cautious with personal data can help avoid financial losses.