Tax seasons have the potential to bring out the best in us and the worst in some others. Many of us think about giving to charity around this time of the year and making a positive difference in someone’s life. Still, some individuals think of how they can dupe us into a tax scam and cause unnecessary havoc with our lives. We’ve identified a few common tax scams you should be aware of and how you can protect yourself. Let’s begin with Phishing and Identity Theft.
Phishing is when a scammer attempts to steal your financial and/or personal information through e-mail, text messages, social media sites, fake websites, or even telephone calls, posing as representatives of financial institutions or governmental agencies such as the IRS. The IRS doesn’t contact taxpayers electronically or telephonically. If you receive any electronic messages or phone calls which appear to be from the IRS, ignore them. Don’t open any web links or attachments. It may be tempting, particularly if the message reads something like “you overpaid your taxes and are due a refund,” but fight the urge. Once these scammers obtain your information, they’re better equipped to commit identify theft or financial theft.
If you receive any unsolicited electronic communication that appears to be from the IRS, forward it to email@example.com. Then, delete the original e-mail or other electronic communication.
Identity theft is probably one of the most frustrating processes for a victim to go through and to overcome. Some examples include:
• Unauthorized credit card charges
• Debit account withdrawals
• New credit card, utility or phone accounts in your name
• Medical care using your insurance
• Fraudulent tax return filing using your SSN
The challenge with fraudulent tax returns is that you may not even be aware you are a victim until you file your tax return. Some scammers will file and forge a tax return early in the season using your SSN. When you file your legitimate return later in the filing season, you may discover that two returns have been filed using the same number. The IRS may mail you a letter indicating that more than one tax return was filed using the same SSN, or the IRS may indicate that its records show you received wages from an employer unknown to you.
Here are some tips to protect against identity theft:
• Do not carry your SSN on you
• If you own a business, do not use your SSN as the business’ employer identification number
• Check your credit report every 12 months
• Make sure your personal information at home is stored securely
• Protect your personal computers by using firewalls, anti-spam/virus software, and up-to-date operating systems
• Do not provide personal data over the phone, through the mail or online unless you initiated the contact and know who you are dealing with.
If you think you may be the victim of identity theft, notify the police. Additionally, if you receive a notice from the IRS which may be a result of identity theft, respond immediately. If you believe someone may have used your SSN fraudulently, fill out the IRS Identity Theft Affidavit, Form 14039.