Your caller ID shows it is the IRS. You already have tax time stress. Maybe you owe for last year, or worse yet, you haven’t even filed last years taxes. When you answer, the caller demands that if you don’t make an immediate payment they will send a sheriff to arrest you. You may even think this can’t be for real. But it’s tax time. Scammers prey on stress and fear. To make things worse, scammers are becoming more sophisticated. Now when they contact you they spoof the caller ID or use an email address so it looks like it is coming from IRS. Our firm has actually been contacted by people here in Waldorf and Southern Maryland who have received such calls. A little education can make these scam calls and emails easy to spot.Both the IRS and the Federal Trade Commission have numerous articles on their websites about how to identify a scam and what to do if you are a victim of tax identity theft.
Tax time fraud takes many forms. Some of the more common scams, along with the pay up or else scam, are email pfishing scams that try to get you to divulge personal information, identity theft scams that file a fake return to get your refund, and even computer security breaches of the IRS website.
The phishing scam takes several forms. But the goal of the scammer is to obtain your personal and financial information by asking you to confirm your bank account, social security number and other information. This scam may come in the form of an email or a phone call. They may claim that this information is necessary for your refund may be processed. They may even claim that you may have been victim of fraud so they need to verify your identity to figure out which of the duplicate tax returns is the legitimate one. For more on these type of scams see the IRS article on Phishing and this article shared by Askey, Askey & Associates.
Tax refund fraud can range from someone stealing your mail to a scammer obtaining enough of your information so that they can pretend to be you and file a fake tax return with your information to get a refund. In this age of direct deposit refunds it is actually this second type of sophisticated identity theft that seems to be the bigger problem now. Because of this, the IRS has taken steps to make sure your data is more secure. They require tax preparers and tax preparation software providers to use passwords that are at least eight digits. The IRS even warns that identity theft has become more sophisticated as this article by Glenn Frank points out: Identity Theft Goes Big Business. Because of this the IRS has also put in place programs that help victims of this type of identity theft recover from this crime. For more on this see the IRS article on Combatting Identity Theft.
With the data security breaches last year at Target, Marshalls, and HomeDepot you may not even remember that the IRS had a security breach of its own. While it wasn’t the largest or most sophisticated of breaches, the fact the information from filed tax returns was obtained make this one of the scarier computer security breaches of the year. In this case scammers went on the IRS website and used personal information obtained from other sources to order tax transcripts, which essentially are copies of filed returns. This scam ended up effecting over three hundred thousand tax filers.
While it may not be possible to be 100 percent safe, there are steps you can take to minimize your exposure to these scams and mitigate the damage if you are targeted. The first step is just a healthy dose of skepticism. Because of the bankruptcy cases I handle I often have to deal with the IRS. I assure you they are not likely to email you out of the blue. They still do almost all of their communication by snail mail. And while it may just be their bankruptcy department, most agents tend to be fairly polite. They certainly are not prone to bullying or rudeness. After all, they are the IRS, they can be polite and most tax filers are still afraid of them. Besides this isn’t personal for the IRS employee. If the person is being rude and threatening it probably is a scam.
Use your common sense. If the IRS is sending someone out to arrest you, are they really going to call to warn you the sherif is on the way? Are they really going to demand you pay by a prepaid credit card? To make sure you are aware of the latest scams sign up for the Federal Trade Commissions emails Scam Alert Service.
Make sure you keep you data secure. If you are using a tax preparation program make sure you use a secure password that is unique to that program. Make it is random, use upper and lower case letters, symbols and numbers. When you print your taxes make sure you keep them in safe place, preferably under lock and key. When it come time to get rid of your older returns make sure you shred them.
If you are ever targeted or victimized by one of these scams alert the IRS and the FTC. If you think you have received a scam email or phone call but want to make sure it isn’t really the IRS just contact us. We will be happy to provide you with a little sanity check.