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.
Both the FDIC and the Wisconsin Bankers Association (WBA) have sent alerts regarding these scams. Here’s a summary provided by the WBA 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, report it by sending it to [email protected]. 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 (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 more than $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.
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.