Now that W-2 forms are arriving, it’s time to consider how to stay safe from tax season scams. Every year, unfortunate taxpayers go to file their returns and are shocked to find that someone else has filed a fraudulent one in their name! Some innocent people also receive fraudulent phone calls from criminals impersonating tax officials. Sadly, tax fraud has only become more widespread as digital communication has opened new ways for it to happen.
While the IRS reports on multiple taxpayer-related scams, and even publishes a Dirty Dozen list , three scam variants are worth highlighting:
- Phishing and malware schemes
- Identity theft and falsely filed tax returns
- Impersonation scams
Once criminals have your information, they can continue to commit identity theft well beyond tax season. Here are some details on each of these scams, along with how to identify them and seek help in case of identity theft:
Phishing and malware schemes
The first type of scam often leads to identity theft and falsely filed tax returns, but may also result in you downloading malware. This happens when criminals send convincing phishing emails or direct you to convincing websites that appear to be IRS, state government, tax software or financial institution websites. Their goal is to trick you into entering your login credentials, verifying sensitive personal information or downloading malware.
- Never click on email links; type the organization’s website into your web browser.
- If you feel something is suspicious, contact the organization through a known method, like their publicly-posted customer service line.
- Don’t reply to emails or texts asking for personal or tax information.
Identity theft and falsely filed tax returns
Once criminals have your personal information, they can use it to commit identity theft or file a false tax return in your name. In this case, if the criminal files the return before you do, they’re getting your refund money and forcing you to go through the arduous process of proving that it wasn’t you who filed the return. Criminals send phishing emails or make phone calls to trick you into providing your information so they can commit this type of fraud.
- Be wary of any contact by phone or email claiming to be from the IRS, as they don’t contact taxpayers directly for this type of information.
- File your tax return as soon as you get your W-2 forms and other tax information. Criminals can’t successfully file a fraudulent return if you’ve already filed with the IRS!
This scam involves a criminal impersonating the IRS or a tax official, such as a tax advocacy panel or tax preparer. They may say you owe money to the IRS or your state tax department or may represent themselves as a trusted tax authority and request information. This contact can occur through websites, emails or threatening calls or text messages that seem official. Sometimes, these scammers request that their victims pay by strange methods like gift cards or prepaid cards.
If you do in fact owe tax money to the IRS, you’ll first receive an official bill in the mail before being contacted by phone or email. For a quick reference, the IRS states that these are four things they’ll never do :
- Ask for credit or debit card numbers over the phone
- Call to demand immediate payment using a specific payment method, such as a prepaid debit card, gift card or wire transfer
- Threaten to immediately bring in local police or other law enforcement groups to have you arrested for not paying
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe
Seeking help and reporting scams
If you suspect that you’ve been a victim of fraud or identity theft, please visit the Federal Trade Commission’s website , which provides a step-by-step recovery plan and assistance in taking action. It allows you to report:
- If someone filed a return fraudulently in your name
- If your information was exposed in a major data breach
- Many other types of fraud
If you believe someone has used your Social Security number to fraudulently submit a tax return, you can also call the IRS at 800-908-4490.
Keep these common types of fraud in mind, and don’t hesitate to seek assistance if you become a victim.
Consumer Tips from Your Community Bank
Bank of Brodhead
Common Tax Scams for 2016
The Internal Revenue Service (IRS) recently released its annual "Dirty Dozen" ranking of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud. Here's a summary of three of the most common tax scams and ways that consumers can protect themselves:
The IRS has seen an increase in phone scams, where consumers receive a call from someone pretending to be from the IRS. The caller typically is hoping to steal either money or the consumer's identity. There are many variations of this scam. Some consumers may receive a call notifying them that they're eligible to receive a huge refund, but need to confirm some personal information such as bank account or Social Security numbers in order to receive the money. Others may be threatened with jail time if they don't pay "overdue" taxes.
Dodging this scam is simple. Just remember that the IRS will never call about taxes owed without first mailing a bill, and will never demand payment without offering the consumer the opportunity to appeal the amount owed. Additionally, local law enforcement will never be called to arrest someone for not paying taxes.
Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft. If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to email@example.com . The IRS does not initiate contact with taxpayers by email to request personal or financial information.
This time of year, an identity thief typically uses a legitimate taxpayer's identity to fraudulently file a tax return and claim a refund. The IRS has a special section on their website ( www.IRS.gov/identitytheft ) dedicated to identity theft issues, including YouTube videos, tips for taxpayers and an assistance guide. The IRS has also increased its efforts to combat this type of fraud. From 2011 through October 2014, the IRS has stopped 19 million suspicious returns and protected over $63 billion in fraudulent refunds. The best way to protect yourself is to protect your information. Never give out your Social Security number, use the Internet with caution, and always shred documents that contain sensitive information.
Keep these scams in mind as you get ready to file your taxes this year. Always remember: if it sounds too good to be true, it probably is. You can read the full list of scams on the IRS website www.irs.gov/pub/irs-news/IR-15-026.pdf .
Remember: This year's filing deadline is a few days later, too. The filing deadline for this year is Monday, April 18, because April 15, a Friday, is Emancipation Day in Washington.
For a comprehensive list of scams visit the IRS website at https://www.irs.gov/uac/Tax-Scams-Consumer-Alerts
Bank of Brodhead was founded in 1896 serving the surrounding community for 119 years. A locally owned and with local decisions, Bank of Brodhead is your independent hometown bank.
It’s tax season, which means it’s also time for tax scams, with numerous onlinescams that attempt to steal people’s tax refunds, bank accounts or identities.
The Internal Revenue Service (IRS) estimates it paid $5.2billion in fraudulent identity theft refunds in the 2013 filing season. Websense Security Labs reported in 2014 it saw approximately100,000 IRS-related scams in circulation every two weeks.
This year, we need to be especially careful in light of the Anthem Breach, in which data from approximately 80 million customers was exposed, triggering new phishing attacks offering false claims of creditmonitoring services.
Users who have already filed their taxes this season canstill be vulnerable to tax-related scams. Many schemes take advantage of usersby alleging to have information about the filer’s refund or noting a problemwith the return that was previously filed.
One scam that has already been impacting users this season involves phishing emails claiming to be from Intuit’s TurboTax. The emails prompt users toclick on links to verify their identity or update their accounts in an attemptto download malware to the victim’s machine or steal data such as SocialSecurity numbers (SSNs) or financial information.
Below are some of the most common email scams users should be cautious about:
- The email says the user is owed a refund and should forward a bank account number where the refund may be deposited. Once the scammer has the bank account information, that account will see a big withdrawal, not a deposit.
- The email contains exciting offers or refunds for participating in an “IRS survey.” This fake survey is actually used to acquire information to perform identity theft.
- The email threatens the user with fines or jail time for not making an immediate payment or responding to the email.
- The email includes a “helpful” downloadable document (for example: new changes in the tax law, a tax calculator, etc.). In reality, the download is a malicious file intended to infect your computer.
How To Avoid Becoming A Tax Scam Victim
- Don't respond to emails appearing to be from the IRS. The IRS doesn't initiate taxpayer communications through email or social media to request personal or financial information. If you receive an unsolicited email claiming to be from the IRS, send it to firstname.lastname@example.org .
- Don't respond to unsolicited emails and don't provide sensitive information via email. If the email appears to be from your employer, financial institution, broker, etc., contact the entity directly. Don't open any attachments or click on links contained in unsolicited or suspicious emails.
- Carefully select the tax sites you visit. Use caution when searching online for tax forms, advice on deductibles, tax preparers and other similar topics. Don't visit a site by clicking on a link sent in an email, found on someone's blog or in an advertisement. The website you land on may look just like the real site, but it may be a well-crafted fake.
- Secure your computer. Make sure your computer has all operating system and application software updates. Anti-virus and anti-spyware software should be installed, running and receiving automatic updates. Ensure you use a strong password and different passwords for each account.
Other Resources you may refer to...