With tax season upon us, it’s important to remind everyone to be diligent and not fall for any of the circulating scams.
Tax identity theft is when an identity thief uses your social security number for their job (so additional income that isn’t yours is reported under your Social Security Number), or to steal your tax refund. Or perhaps a thief might try to claim your child as a dependent.
How common is it? Pretty common, considering the IRS paid out $3.1 billion in fake refunds in 2014 (though it estimates it did prevent $22.5 billion in attempted identity-theft tax fraud).
A Bronx, New York resident recently admitted his role in a phony tax return scheme that relied on stealing people’s identities. The scam cost the government $2.89 million. This is just one example of tax identity theft in the news.
If you get an unexpected notice from the IRS, it could be tax-related identity theft.
What to Watch For
Common notices that could alert you to a scam include:
- A letter that says more than one return has been filed in your name.
- A notice that you received wages you didn’t report. These could have been reported from an employer you don’t know.
If you suspect someone used your Social Security number to get a job or steal your refund, you should contact the IRS immediately to report the fraud. You’ll also need to send a copy of your police report and/or an IRS ID Theft Affidavit Form 14039, along with proof of your identity.
Related to this issue are imposter scams, usually executed via phone calls or through phishing emails. While there are variations on the theme, generally callers claiming to be from the IRS demand you wire money right away, or pay past tax bills using gift cards.
If someone calls you over the phone to “verify” tax info, it’s almost assuredly a scam. Never give out personal financial information to anyone claiming to be from the IRS over the phone The IRS doesn’t just call you out of the blue. They will send notices or bills if you owe any taxes. And the IRS certainly isn’t going to ask for payment using a gift card, prepaid debit card, money order or wire transfer. They won’t ask for a credit card number over the phone, either.
Common schemes include scammers calling and hounding students and parents to pay the “federal student tax,” which doesn’t exist.
Phishing scams are also getting more sophisticated, as reported in this CNBC story that discusses communications from people pretending to be tax preparers.
“Official-looking emails are designed to fool taxpayers into thinking they’re communicating with the IRS, tax preparers or tax software companies. Known as phishing, these emails and text messages are used by scammers to seek information that will help them file a false refund in your name,” according to the story.
You should forward any phishing emails to firstname.lastname@example.org.
How common are these schemes and how often do people fall for them?
Fairly often, at least according to the stats recently released by the Treasury Inspector General for Tax Administration (TIGTA).
“Since the fall of 2013, TIGTA has been tracking and investigating this scam, in which criminals impersonate IRS employees in order to extort money from individual taxpayers. To date, more than 1.8 million people have reported to TIGTA that they have received an impersonation call. More than 9,600 victims have reported that they paid the criminal impersonators a total amount of more than $50 million,” according to the release, dated Dec. 13, 2016.
What to do if You Get a Call
If you get a call from someone claiming to be with the IRS asking for a payment, here’s what you should do:
- If you owe Federal taxes, or think you might owe taxes, hang up and call the IRS at 800-829-1040. IRS workers can help you with your payment questions.
- If you do not owe taxes, fill out the “IRS Impersonation Scam” form on TIGTA’s website, www.tigta.gov, or call TIGTA at 800-366-4484.
- You can also file a complaint with the Federal Trade Commission at www.FTC.gov. Add “IRS Telephone Scam” to the comments in your complaint.
TIGTA encourages taxpayers to be alert to phone and email scams that use the IRS name. Do not open any attachments or click on any links in those e-mails. Also, be aware of other unrelated scams (such as saying you are a lottery or sweepstakes winner) and solicitations (such as debt relief offers) that fraudulently claim to be from the IRS.
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