Top Tax Scams
Just in time for the tax filing deadline, the Internal Revenue Service has released its 2013 “Dirty Dozen” tax scams, ranging from identity theft to online phishing schemes.
Here are three of the most common identified threats and how to protect yourself:
Identity theft is number one on the IRS’ list of tax frauds this year. It’s a topic that we’ve covered before with 2012 proving a banner year for ID theft. Armed with your personal information, ID thieves can fraudulently file a tax return and claim your refund, as we saw in the case of Jessica Asford. “I called the IRS one afternoon to check the status of my tax refund and they essentially told me that they mailed my refund to someone in California,” she said. “Considering I live in New York, that raised a red flag.”
To combat increased cases of ID theft, the IRS has created a special section of its site to identify issues. If you believe you’re at risk for ID theft tax fraud -maybe you’ve lost identification or have had some suspicious financial activity recently – you can call the IRS Identity Protection Specialized Unit at 800-908-4490. More information can be found on the special identity protection page.
Ever get an email from an address you don’t recognize, asking for personal financial information? Well, that could have been a phishing attempt. It’s typically carried out via email and with messages that look legit. Say, for example, you get an email from what seems to be your bank or financial institution. These emails will direct you to a phony site and prompt you to provide valuable information: passwords, Social Security number, date of birth, etc. With that, scammers have all they need to break into your accounts. Around tax season, these phishing attempts coud come in the form of fake messages from the IRS, your bank or popular tax preparers.
You should know the IRS, and most financial institutions, do not initiate contact via email to request personal information. Whatever you do, don’t respond to a message if you’re unsure whether it is legit. If you receive a message on behalf of the IRS that you suspect is a phishing attempt, report it by forwarding it to firstname.lastname@example.org.
Return Preparer Fraud
Finally, more than half of taxpayers will use tax professionals this year to prepare their returns. Unfortunately some are fraudsters masked as trustworthy tax pros. Some have been caught stealing personal information or inflating returns with fraudulent information. When hiring a professional, seek references from friends and family and verify that the preparer has their IRS Preparer Tax Identification Numbers (PTIN.) That number means they’re authorized to provide the service and they should use it to sign the returns they prepare. Also, watch out for preparers who charge you a percentage of your refund, as most professionals charge a standard fee. To help you find a preparer, the IRS has a guide with tips, a list of red flags and information on how to file a complaint if you run into trouble.
For the full list of the top 2013 tax scams, check out the IRS’ site.
Photo Courtesy, 401(K) 2013.