IRS - Tax scams
Identity theft is a crime that's anonymous in many cases, but in the case of tax
identity theft, the government doesn't have in place the level of protection
that many other financial institutions do to prevent fraud. At this
moment, the IRS is one of the weakest links in the financial services world and
as a result is highly targeted.
The IRS allows filing of taxes as early as Jan. 19, and prompt thieves will file
immediately with the hopes of beating more cautious individuals to their own
For a list of the most recent Tax Scams,
What Rebate? Far more advanced than simply intersecting a rebate check or prepaid card, thieves
are stealing year-end statements, W-2s and other income information to
file returns on victims' behalf. Americans can legitimately receive their
refunds in a variety of ways: direct deposit (often the fastest), loaded onto a
prepaid card, or via check mailed to a location of their choosing. Thieves will often choose prepaid cards. Prepaid cards are a source of significant amounts of fraud. If you use tax
filing assistant like HR Block or Turbo Tax you could get a refund on a prepaid
card. They're beautiful from a tax ID theft perspective because
they're just like cash.
How to Protect Yourself
- Shred any paperwork not
needed for tax preparation.
- What to Shred. Checks from a credit card company offering low annual percentage rates
for balance transfers and other pre-approved credit offers should be
shredded upon receipt if you don't plan to use them. Once reconciled
with corresponding accounts, ATM receipts, canceled checks, and pay
stubs can all be shredded.
- What to Keep. Hang on to monthly banking, brokerage account, and credit card
statements. "Many people just make the payment and don't look at the
fees and charges," Person says. "Compare the current statement to the
previous statement. Verify that there were no mistakes or differences
between last month's ending balance and this month's starting balance."
Once you've reviewed the statements and addressed any inaccuracies, you
can shred them when the year-end statement arrives. Certain papers should be kept for life, including divorce and estate
documents and annual retirement plan forms. Per IRS recommendation, keep
filed tax returns that don't require additional payments for three
- Go Digital. The best way to minimize year-end paperwork is to minimize paperwork in
general. Whenever possible, opt out of credit card offers, request that
banks not send blank checks if you don't plan to use them, and choose to
receive forms digitally. Sign up for online banking when it's available
to eliminate the need for physical checks (as well as envelopes and
stamps), and opt to get digital alerts when bills have arrived and
payments are due.
Tax returns can also be filed digitally on secure servers, and copies of
the completed forms downloaded directly to a personal computer. Users
can opt to have their Social Security number partially stricken from the
download for additional security. Be wary of a slow-running computer or out-of-place pop-ups when filing
- Be suspicious of any phone calls or emails claiming to be from the IRS,
even with the appropriate logos. According to the IRS website: "The IRS does
not initiate contact with taxpayers by email to request personal or
financial information. This includes any type of electronic communication,
such as text messages and social media channels."
NPR recently published an article on real life tax scams and what the an IRS phone fraud sounds like.
- Don't put your return in your office mailbox or in outgoing mail bin at
work. When filing taxes by paper, take them directly to the post office and
put them right into a postal worker's hands. Tax returns are
usually pretty obvious, and can easily be snatched.
- Finally, don't get complacent. Odds are you will file your tax returns without incident this year, but tax ID
theft is a growing trend. The best way to avoid being a victim this year, and in
future tax seasons, is to remain vigilant.
Taxpayers who suspect they've been victims
of identity fraud should call the IRS Identity Theft department at
800-908-4490 with a copy of a police report, the completed IRS affidavit
state-issued identification. You'll find more information in the
Taxpayer Guide to Identity Theft
the IRS website.
Debt Collection Scams:
Here’s what to know if contacted about delinquent taxes by an IRS private collector:
- Private collectors for the IRS cannot accept direct payments -- all payments should be made to the U.S. Treasury. The agency will not require specific types of payments such as wire transfers or prepaid debit cards. Scammers prefer these methods because they are hard to trace and can be redeemed anywhere in the world.
- Unless the IRS has an incorrect address, both the agency and its private collectors should first make contact by mailed letter.
- Those who owe tax debt but cannot pay in full will be offered an installment plan for up to five years. If five years isn’t enough, “the collector asks for taxpayer financial information to see what sort of deal the taxpayer should get,” explains Robert W. Wood, who covers taxes and litigation for Forbes.
- The same rules on other collectors apply: No calls before 8 a.m. or after 9 p.m. You must be sent a written “validation notice” telling you how much money you owe within five days after first contact. No harassing, abusive or threatening language allowed.
- Certain tax bills (and therefore phone calls) cannot be handled by private collectors for the IRS: those for taxpayers who are deceased, under age 18, in a designated combat zone, or a victim of identity theft. Debtors currently in audit, litigation or criminal investigation are also off-limits to third-party hired guns.