Tax Scams Are Prevalent: Here’s How to Avoid ThemTax season is here, and both individuals and businesses will be busy gathering forms and filling out paperwork. While you’re focused on maximizing your deductions and meeting the April 15 deadline, also watch out for tax-related risks and common tax scams.
File Early to Protect Yourself
If you wait until the last minute to file your taxes, an identity thief might beat you to it.
Tax-related identity theft is a common and growing problem. In a common scam, someone files a fraudulent tax return using another person’s Social Security Number and then claims the refund. When the victim eventually tries to file a real tax return, they can’t because a return has already been filed and a refund has already been issued.
One of the best ways to protect yourself from tax-related identity theft is to file your taxes early in the tax season. The longer you wait, the more time scammers have to swoop in and steal your refund.
Get an Identity Protection PIN
Another way to protect yourself from tax-related identity theft is to get an Identity Protection PIN (IP PIN) from the IRS. If you have an IP PIN and someone tries to file a fraudulent tax return using your Social Security Number or Individual Taxpayer Identification Number, they will be unable to do so without the IP PIN.
If you already have an online account with the IRS, you can get your IP PIN through your account. If you don’t have one yet, you can create one. In addition to being the easiest way to get an IP PIN, your IRS account also gives you access to tax records, payments, balances and more.
For your protection, the IP PIN changes each year. You can find your new IP PIN by logging into your IRS account and looking at the Profile tab.
Be Cautious When Sending Payments or Information
In California, MyNews4 says the Douglas County Sheriff’s Office patrol deputy found more than $507,000 in stolen mail, including many personal checks addressed to the IRS. The thieves stole the mail by putting a device with rat trap glue into the opening of a mailbox and then pulling out the device.
Mail thieves may target letters headed to the IRS because they know there’s a wealth of personal information inside, including names, birthdates and Social Security Numbers. There may also be checks that they can alter in order to drain money from your bank account. The FBI says mail theft-related check fraud is on the rise, with reports of check fraud nearly doubling from 2021 to 2023. Refunds from the IRS may also be intercepted by mail thieves.
Checks left in residential mailboxes overnight or in USPS collection boxes after the last collection of the day are particularly vulnerable. If you need to mail checks or paperwork containing sensitive information, do so directly from inside the post office.
Sending and receiving payments electronically may be safer, but make sure you’re using a secure network and trustworthy tax filing companies.
Watch Out for Imposters
The IRS doesn’t want you to pay tax debts using Amazon gift cards or bitcoin transfers.
Fraudsters often pose as IRS employees and threaten arrest or fines to force victims to act quickly. Don’t fall for it. If someone calls you demanding immediate payment, it’s safe to assume it’s a scam. That’s simply not how the IRS operates. You can always hang up and call the IRS directly at 833-678-7020.
Scammers may also pose as tax professionals. If someone offers to do your taxes for a low rate and promises a big refund, it could be a scam. Do research to ensure any tax professionals are legitimate.
Take Immediate Action if You Are a Victim
If you believe you have been a victim of a tax-related scam or fraud, it’s important to take action as quickly as possible to minimize the damage.
If you suspect that someone has used your information to file fraudulent tax return, you can report this to the IRS by completing Form 14039. This can be done online or by mailing or faxing a paper form to the IRS. You can also report IRS impersonation scams to the IRS and to the FTC.
Heffernan Insurance Brokers is here to help you manage your risks. If you have any questions about risk management, identity theft protection, or cyber insurance, contact us.
