Unfortunately, tax season provides criminals with ample opportunity to commit fraud and cash-in at their victim’s expense. Tax identity theft is now one of the most common tax scams; this occurs when a someone files a false tax return in your name, they will generate and steal a large refund sent by the IRS.
Despite tax identity theft decreasing slightly in 2017, this tax season comes as a greater concern due to the massive Equifax Breach where millions of social security numbers were stolen. This makes consumers even more vulnerable. It is extremely difficult for someone to counter this fraudulent action – often times the only way is to file your return before someone else files one in your name.
This year the IRS is notifying consumers of a new approach to tax return theft. Rather than having fake returns deposited into the criminal’s bank account they are having them deposited into the victim’s account. The fraudster will then contact the victim claiming to be a creditor, collection agency, or to work for the IRS, they will demand payment saying that the refund was deposited on error and the funds are due to pay some outstanding debt. If anyone contacts you claiming to be the IRS you should contact the IRS immediately to report this act.
Below is a list of some other common tax scams:
- Phone scams: The IRS will never call you and demand payment. Even, if the caller offers an IRS identification number, always check the information and never give out information. Criminals do research on their victims and will have a lot of details, this does not mean they are legit and caution should always be taken. If the IRS is looking to collect on a debt, they will send you a letter. If you receive this type of letter, verify it as accurate by calling a real IRS phone number and not the one listed on the letter.
- CPA scams: Some tax professionals have experienced scam communications that are geared toward gathering sensitive information on their clients.
- Payroll scams: Criminals may try to contact employers to gather W-2 information/copies on employees. Employers use protocols to protect this information and never release it over the phone or email.
- Phishing: Criminals will send emails using fraudulent logos, titles, and company information to try and gather (or fish for) information. These emails are used to trick people into confirming information or providing additional information. The best practices for protecting yourself from tax id theft have not changed from last year. Just keep in mind that even though this type of scam has been on the decline, does not stop criminals from thinking up new tricks.
Never trust unfamiliar emails or calls. Even if they provide a lot of details and sound “professional”, do not release or confirm information.