Millennials Are at Greater Risk for Tax Scams Compared to Baby Boomers, According to New ACI Worldwide Study
March 09 2021 - 8:00AM
Business Wire
- More millennials report experiencing phone scams during tax
season compared to baby boomers
- Credit cards prove most popular method of paying taxes toward
close of tax season compared to debit cards in states like
California and Wisconsin
- In majority of states, stimulus checks received in 2020 drove
debit card payments for more taxpayers
New research from ACI Worldwide (NASDAQ: ACIW), a leading global
provider of real-time digital payment software and solutions, and
YouGov showed that 21 percent of millennials experienced phone
scams during tax season compared to 17 percent of baby boomers. The
data based on a survey of 1,237 U.S. adults reveals a shift from
2020 data that showed more baby boomers (23%) experienced phone
scams during tax season compared to millennials (18%).
“The survey sheds light on a likely vulnerability with taxpayers
who tend to be more confident about sharing their financial
information,” said Sanjay Gupta, executive vice president, ACI
Worldwide. “As digital payments continue to grow, taxpayers need to
be more vigilant during tax season. Arming themselves with
information on the latest tax scams is the first step. It’s also
important to note that the IRS never contacts taxpayers by phone,
email or text.”
The ACI and YouGov study also showed that more than half (55%)
of U.S. adults plan to pay their taxes using digital methods (e.g.,
electronic funds withdrawal, debit card, credit card) in 2021
compared to 2020 (50%), showing a steady growth in digital payments
since 2019 (46%). On the other hand, use of cash and other
non-digital methods of payment, such as checks, have continued to
decline, with 26 percent of adults indicating they would pay their
taxes using cash or check in 2021 compared to 32 percent in
2020.
In 2020, according to ACI tax payments data, many taxpayers
opted to use their debit cards as the preferred method for paying
taxes. This was true in a majority of states, including Florida
(68% compared to 31% who used credit cards), Georgia (58% compared
to 38% who used credit cards), Maryland (26% compared to 12% who
used credit cards), New York (48% compared to 32% who used credit
cards), Ohio (66% compared to 34% who used credit cards) and
Washington (55% compared to 44% who used credit cards). However, in
the last three years, taxpayers in some states showed a preference
for credit cards over debit cards closer to the tax deadline,
including California (52% in 2020, 60% in 2019, 57% in 2018) and
Wisconsin (57% in 2020, 60% in 2019, 61% in 2018).
“As stimulus checks were received around May last year, it is
likely that many taxpayers had the ability to pay their taxes
without the need for credit card payment plan options, which has
driven the use of debit cards over credit cards,” Gupta continued.
“In some states, like California, consumers are typically paying
higher sums in taxes, which could be one reason for the preference
of credit card payments for payment financing over debit card
payments.”
Other key findings and trends
include:
YOUGOV DATA How taxpayers plan to file taxes in 2021
- In 2021, 43 percent of U.S. adults said they plan to file their
taxes electronically through popular software like TurboTax, a
slight dip compared to 45 percent who planned to use this method in
2020.
- 51 percent of adults in the 35-54 age group filed or plan to
file taxes electronically in 2021 compared to 51 percent who filed
or planned to file this way in 2020.
- 40 percent of adults in the 18-34 age group filed or plan to
file their taxes electronically in 2021 compared to 47 percent who
filed or planned to file this way in 2020.
- While those who planned to file their taxes through
mail/paper-only dipped slightly from 8 percent in 2020 to 7 percent
in 2021, the data showed that adults in the 18-34 age group (9%)
were slightly more likely than those 35 and older (7%) to do
so.
- While 25 percent of U.S. adults filed or plan to file via a tax
preparer electronically or by mail, 29 percent of adults over 55
years did or plan to do so.
Tax refunds and payments
- In 2021, fewer Americans (30%) said their tax refund is
typically larger than their average paycheck compared to 33 percent
in 2020.
- In 2021, more adults (18%) said they typically owe taxes
compared to those (15%) in 2020.
- Nearly 8 in 10 (79%) adults chose to receive their tax refund
by direct deposit instead of via mailed check, an increase compared
to 74 percent in 2020.
Tax fraud
- More taxpayers are aware of the types of payment fraud during
tax season in 2021 than they were in 2020:
- Phone scams – 68% in 2021 vs. 65% in 2020
- Identity theft – 64% in 2021 vs 65% in 2020
- Email scams – 63% in 2021 vs. 61% in 2020
- Illegal tax preparer – 40% in 2021 vs. 38% in 2020
- Ghost preparers – 24% in 2021 vs. 20% in 2020
ACI TAX PAYMENTS TREND DATA* Tax payment method, by
state
- In California, residents prefer to pay taxes with their credit
card in the month of the tax deadline:
- 2018 (April): 57 percent credit card vs. 43 percent debit
card
- 2019 (April): 60 percent credit card vs. 40 percent debit
card
- 2020 (July): 52 percent credit card vs. 48 percent debit card
(extended deadline)
- In Wisconsin, residents prefer to pay taxes using their credit
card in the month of the tax deadline:
- 2018 (April): 61 percent credit card vs. 38 percent debit
card
- 2019 (April): 60 percent credit card vs. 40 percent debit
card
- 2020 (July): 57 percent credit card vs. 43 percent debit card
(extended deadline)
- In Georgia, more individuals pay taxes using their debit card
over credit card payments, except in 2019 when more individuals
preferred to pay with their credit card:
- 2018 (April): 45 percent credit card vs. 52 percent debit
card
- 2019 (April): 49 percent credit card vs. 48 percent debit
card
- 2020 (July): 38 percent credit card vs. 58 percent debit card
(extended deadline)
- In Pennsylvania, more individuals pay taxes using their credit
card over debit cards in the month of the tax deadline:
- 2018 (April): 58 percent credit card vs. 40 percent debit
card
- 2019 (April): 55 percent credit card vs 42 percent debit
card
- In 2020 (July): 52 percent credit card vs. 46 percent debit
card (extended deadline)
*additional data available upon request
“As we head into the 2021 tax season, it’s important to note
that the uncertainty of the pandemic has left many unsure of how to
handle taxes based on their unique situations. For many who are
struggling to pay bills as a result of the pandemic, a tax refund
could be extremely beneficial, and receiving the refund quickly
would be advantageous. For others, including those who expect to
owe taxes this year, anything that could delay the payment without
penalty so that they have time to get their finances in order may
be best,” Gupta concluded.
ACI recommends the following top tips for
taxpayers this season:
- File early: As basic as it seems, file your taxes as
early as possible to ensure you get your refund on time.
- File online: Avoid postal delays by filing your taxes
online and paying digitally.
- Avoid check payments: If possible, avoid paying by
check, which could get lost, delayed or intercepted by
fraudsters.
- Be aware of fraud: There are growing instances of tax
fraud where fraudsters take advantage of vulnerable consumers by
misleading them into sending their payments to an unauthorized
location or re-routing their tax refunds to a phony bank account.
Some common ways fraudsters take advantage of consumers include:
- Phone scams
- Email scams
- Identity theft
- Ghost preparers
- Protect financial information: Never give away any
financial information over the phone. Note: The IRS will never make
contact with taxpayers via phone, text or email.
- Consider real-time payments for late payments: If you
are filing later in the season due to financial hardship, consider
paying through companies that offer real-time payment options so
that your payments are not delayed. With real-time payments, your
tax payments are instantly (within minutes) sent to the IRS.
For more than 20 years, ACI has been supporting the billing and
payment needs of federal, state and local government entities with
secure, PCI-compliant solutions. Learn more here. ACI Payments,
Inc. (formerly Official Payments) is an ACI Worldwide company.
Methodology All figures, unless otherwise stated, are
from YouGov Plc. Total sample size was 1,237 adults. Fieldwork was
undertaken between February 9-10, 2021. The survey was carried out
online. The figures have been weighted and are representative of
all U.S. adults (aged 18+). Generations were defined as follows:
Millennial (born 1982-1999, 398 total), Gen X (born 1965-1981, 313
total), and Baby Boomer (born 1946-1964, 397 total).
About ACI Worldwide ACI Worldwide is a global software company
that provides mission-critical real-time payment solutions to
corporations. Customers use our proven, scalable and secure
solutions to process and manage digital payments, enable
omni-commerce payments, present and process bill payments, and
manage fraud and risk. We combine our global footprint with local
presence to drive the real-time digital transformation of payments
and commerce.
© Copyright ACI Worldwide, Inc. 2021 ACI, ACI Worldwide, ACI
Payments, Inc., ACI Pay, Speedpay and all ACI product/solution
names are trademarks or registered trademarks of ACI Worldwide,
Inc., or one of its subsidiaries, in the United States, other
countries or both. Other parties’ trademarks referenced are the
property of their respective owners.
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Media Contact Nidhi Alberti
nidhi.alberti@aciworldwide.com 781-370-3600
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