Avoid These Online Tax Scams
Economist Milton Friedman once wrote: “The avoidance of taxes is the only intellectual pursuit that still carries any reward.” Today, we can add “tax scams” to that list of things to avoid. Just as Americans gear up for the tax season, so do fraudsters all over the world. Here are the biggest tax cons to watch out for...
Don't Fall For These IRS Tax Scams
With billions of tax refund dollars in motion, scammers flock to the U. S. like bears to a salmon spawning run. Every year, taxpayers lose millions of dollars and their identities by falling for time-tested and new scams.
IRS Impersonation Telephone Scams are sophisticated and aggressive ploys. In this NPR article, you can listen to critical segments of an hour-long scam call recorded by Pindrop Security, a fraud detection specialist. There’s a simple way to tell if a call from the IRS is fake: the IRS doesn’t call taxpayers out of the blue, it always sends a bill and notice of taxpayer rights via USPS first.
But scammers are skilled at inducing panic and making victims forget that. Then come demands that the IRS would never make, i. e., “Go to 7-11 and buy $2000 worth of gift cards…" That should throw a few red flags.
Your Social Security Number is all a fraudster needs to file a false tax return in your name, directing a refund to be deposited to the fraudster’s bank account. Guard that SSN jealously. If asked for it on a form, write “n/a” in the blank and cite ID theft as your reason if asked. I am finding that doctors and others who don’t have a legit need for SSNs are backing down on this demand. ID theft is a well-known and widely accepted reason to keep your SSN private as much as possible.
To the IRS’ credit, it’s managed to reduce reports of stolen identities by half in just the past year. The added security comes at the cost of additional wait times for refunds. But you would wait even longer to receive a refund that was stolen by a scammer.
Don't Get Caught By a Phisher
Phishing emails are another major tax fraud ploy. Again: the IRS always initiates contact with taxpayers via US Mail. The agency does no business at all via insecure email. Any email purporting to be from the IRS or its independent “collection agency” is a fake. Ignore it.
Phishing emails may be the first prong of a multi-prong attack, designed to collect personal information that can be used to bolster the credibility of a phone scam. Don’t lower your guard just because an email doesn’t ask for money.
Promises of big refunds are often used to appeal to greed. Greedy people do stupid things like signing blank tax forms and returning them to people they don’t know. These scams are usually promoted via flyers, direct mail, and even fake storefronts, but they can be worked via email or websites, too. No one can guarantee you any tax refund before they’ve seen your tax numbers; don’t fall for this con.
Security guru Brian Krebs warned last year about a tax scam that can be worked on you without any contact between you and the scammer. Batches of personal information traded on the “dark Web” now include files containing the W2 records of employers. According to Krebs, W2 data files are often obtained by impersonating a CEO or CFO who ostensibly needs a subordinate to email the file to him. Scammers are also hacking into the files of tax preparation and payroll services, some of which are one-horse shops with zero cyber-security policies.
Krebs also advises taxpayers to File Your Taxes Before Scammers Do It For You. As a result of the massive Equifax data breach in 2017, it's even easier for fraudsters to request phony tax refunds in the names of identity theft victims. If you file your tax return electronically and get a rejection, that's a red flag. Contact the IRS if you think you may have been a victim of tax return fraud.
To protect yourself against these unknown threats, there are two things you can do. First, file your tax return early. Second, apply for an Identity Protection PIN that will authenticate your identity to the IRS when you file electronically. No PIN, no refund. To get an IP PIN, you have to certify that you’re at risk of identity theft; but aren’t we all?
Have you ever been victimized in an identity theft or tax scam? How did you handle it? Your thoughts on this topic are welcome. Post your comment or question below...
This article was posted by Bob Rankin on 6 Feb 2018
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Article information: AskBobRankin -- Avoid These Online Tax Scams (Posted: 6 Feb 2018)
Copyright © 2005 - Bob Rankin - All Rights Reserved