Tax identity theft is a fast-growing crime, impacting more than 260,000 victims a year and costing the IRS more than $3 billion in fraudulent tax refunds. In 2016 alone, the IRS reported a 400 percent surge in phishing and malware incidents related to the crime.
Taxpayers can protect themselves by learning how to spot some of the most common scams criminals use to steal valuable personally identifiable information. Here’s a quick breakdown of scams:
It’s important for taxpayers to remember that the IRS first contacts people with a letter in the mail if there is an issue with tax payment. The agency will never initiate contact through email or social media. Nor will it ever demand immediate payment of taxes or make threats to involve local police for not paying.
Follow these five tips to protect yourself:
• File Early. The IRS flags a second return as suspicious, so file early, before the bad guys.
• Go electronic. Opt for direct deposit of tax refunds to avoid lost or stolen refund checks.
• Choose tax preparers carefully. Avoid unscrupulous companies that steal personal data.
• Keep sensitive tax data secure on a password-protected or encrypted external drive and store in a secure location.
• Report scams to email@example.com.
Take action now before identity theft strikes. Check with your providers. You already may receive proactive identity management services from CyberScout through your insurer, financial institution or employer.
1 Identity Theft and Tax Fraud,” U.S. Government Accountability Office, May 2016, and “IRS Steps Up Security to Prevent Identity Theft on Tax Returns,” Fort Worth Star-Telegram, Jan. 6, 2017, http://www.star-telegram.com/news/business/bizcolumns-blogs/teresa-mcusic/article124975089.html.
2 “Consumers Warned of New Surge in Email Schemes,” IRS, Feb. 2016, https://www.irs.gov/uac/newsroom/consumerswarned-of-new-surge-in-irs-email-schemes-during-2016-tax-season-tax-industry-also-targeted.
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