It seems the problem of tax fraud gets a little worse each year, and 2016 is no exception. The breadth of tax scams is now so intense that the IRS ended up issuing an alert in October, six months before the annual tax deadline.
As you pull your paperwork together and prepare your returns, it’s a good idea to make security and protection just as important as receipts and deductions. The tax scams are now so serious that preventing identity theft is fast becoming part of tax prep.
Here are 3 common tax scams you need to know about:
- Threatening phone calls: These are becoming more frequent, according to the IRS. Criminals use caller ID spoofing to make it look like the IRS is calling, and they tend to have the victim’s name, address, and other personal information on hand. With that sense of legitimacy in place, scammers often threaten victims with arrest or scare them into believing a debt will get larger every day unless payment is made immediately.
- Phony returns: Identity thieves use your social security number (SSN) to file a fake return using your name. By whipping up a bunch of deductions and credits, they often get a large tax refund. Because the IRS allows taxpayers to get their returns in the form of prepaid debit cards — to help those who don’t have checking accounts — the tax scams are harder to trace. Another challenge to online returns may come up as a result of a recent hack involving e-file PINs that were generated by using stolen SSNs.
- Phishing scams: Using a fake website or official-looking logos on an email, scammers contact you by email and ask you to verify your information so that your tax return can be processed. Since so many people file their returns online, this seems like a logical request, especially if a web address looks legitimate, like IRSgov.com. Don’t fall for it (the real site is irs.gov).
When considering strategies for preventing identity theft, you can take several tactics to make sure the IRS is getting your money or issuing a refund to you rather than to scammers:
- Never give out personal information over the phone, and especially don’t respond to “urgent” requests or threats. The IRS never demands immediate payment and won’t call you without first sending a bill in the mail.
- The IRS also doesn’t bring in police or issue arrest warrants based on tax bills. If you think you legitimately owe money, call the IRS directly at 800-829-1040 and a representative will help you understand your payment situation.
- Don’t click on any links in emails purporting to be from the IRS or visit any websites mentioned in those emails. The IRS doesn’t initiate contact with taxpayers through email; the agency always sends snail mail instead.
- File your taxes early if possible. One way that many people discover they’ve been scammed is that fraudsters file a return before they do. You can shut them down if your return arrives first.
Tax preparation is never on anyone’s list of fun activities. But make sure it’s just a chore and not a security risk by looking out for tax scams and preventing identity theft when you file.