Avoid tax scams and overcome identity theft this tax season
Consumer losses due to fraud increased from $1.8 billion in 2019 to $3.3 billion in 2020, according to the FTC. The data for 2021 seems to be worse. Explore tips on how to keep your refund and avoid tax scams that prey on fears of the IRS.
1) Follow good practices to prevent identity theft
- Don’t share your Personal Identifiable Information (PII) any more than necessary. Protect documents that have your Social Security Number (SSN), your birth date, and other PII.
- Shred or block out information when disposing documents, including your tax returns and tax documents. Yes, people still gather information from the trash.
- Ask questions before giving out your PII, especially your SSN. What are you going to do with my information? How will you protect my information? Can you use a different identifier?
- Do not give your information to someone who calls, emails, or texts you. Once someone uses one of those methods to contact you, find the person’s or organization’s contact information separately, perhaps through an internet search engine. Once you have a valid path to contact the person/organization, then contact them and only share information that is absolutely necessary to share. The FTC provides guidance on how to recognize and avoid phishing scams.
2) Know how the IRS contacts you
The IRS does not initiate contact with taxpayers through email, text, messages, or social media channels.
There are some specific situations when the IRS would call a taxpayer or visit their home. However, these situations would be preceded by a letter through the mail, and in most cases, there would have been several letters. This is one reason why it is important to keep your address with the IRS up to date.
The IRS will not call (or text, email, or message) demanding immediate payment using a specific method of payment. They will not demand payment without providing the opportunity to appeal or question why you owe money. They do not threaten to bring in law enforcement if you fail to pay.
If you do have tax debt and the IRS does come to you in person, they do not request payment to anyone other than the U.S. Treasury. If an IRS auditor wants to meet with you in person, they will arrange an appointment, and they will only call you after they have sent notification letters. (Keep your address with the IRS up to date.)
3) Report tax scams
If you report tax scams, you can help all of us avoid them. You can report tax-related scams at this website. You can call at (800) 366-4484. You can also report them to the FTC using the FTC Complaint Assistant.
4) Follow good tax filing practices
First of all, if you claim children on your tax return, you are a prime target for someone else to file a tax return in your name. This is due to the valuable tax credits associated with claiming children.
You can minimize the opportunity for criminals to file a tax return in your name by filing electronically before they file. You should still file only after you have all the needed information, just don’t delay once you do have all the needed information.
The IRS will only accept one tax return electronically for each social security number, and each social security number can only be used on one tax return.
If you file your tax return on your own with tax software, do your best to make sure you avoid any phishing attempts that may be trying to look like communication from that software company. Make sure you don’t leave any PII or account information in any public computers or enter your information via public wifi networks.
If you file your tax return with a tax professional, make sure you are using a legitimate tax professional. Don’t use a “ghost” tax preparer, which is someone who prepares a tax return for someone else for money but doesn’t sign their name on the tax return.
Professional tax preparers are required to sign tax returns they prepare. You can find good IRS guidance for how to choose a tax professional here.
What if I am already a victim of tax identity theft?
Often, tax identity theft is recognized when a tax return is rejected electronically due to one already being filed in the taxpayer’s name. At other times, it is discovered after receiving IRS correspondence. Regardless of how it is discovered, the IRS has a form to report identity theft and that should be filed. The form is called Identity Theft Affidavit (Form 14039).
If you are a confirmed tax identity victim and the associated tax issues are resolved, the IRS will issue you an Identity Protection PIN (IP PIN). You will be sent a new IP PIN every year and you will need to use this to file your tax return electronically.
A proactive step to reduce the possibility of tax identity theft is to request an IP PIN, which you can do even if you have not been a tax identity theft victim. You can do this online, by mailing a form, or in person at your local Taxpayer Assistance Center.
Please note that if you are receiving an IP PIN every year that this is another reason to ensure that the IRS has an up-to-date address.
Becoming a victim of fraud or scams is invasive and frustrating. The stress, fear, and frustration can be overwhelming. If you aren’t able to avoid the scam or fraud, make use of the free resources available to help. This includes the IRS, the FTC, and the non-profit Identity Theft Resource Center which has a Victim Identity Theft Call Center (1-888-400-5530).