Identity Theft: Tax Scams

With tax season upon us, the IRS has issued warnings that scam artists are on the prowl and they could be after you. They have again issued their list of the “Dirty Dozen” Tax Scams, this time identity theft tops the list. You can read about 2015’s number one, phone scams, in our post from last year. While identity theft can happen at any time of the year, many criminals take advantage of tax season to get their victims.

Tax-related identity theft happens when someone uses your social security number and personal information to file a tax return and claim a fraudulent refund. Although identity theft doesn’t only happen with regard to tax information, the IRS is often the first to notify victims that their identity has been stolen when they receive two distinct tax returns using the same social security number.

In past three years Criminal Investigation (CI) helped convict about 2,000 identity thieves. According to the IRS Newswire, the IRS started 776 identity theft related investigations, resulting in 774 sentencings through CI enforcement efforts. The average sentences for these crimes was 38 months in jail with the longest sentence being over 27 years.

What the IRS is Doing to Help Protect You

The new measures attack tax-related identity theft from multiple sides. Many changes will be invisible to you but invaluable to the IRS, states and tax industry in protecting you. Here are some important changes you may see.

• New Security Requirements
  • There are new security requirements when you’re preparing your taxes online, especially when you sign in to your tax software account.
• Additional Information
  • Some state returns may ask for additional identity information, such as your driver’s license number, to make sure it’s really you.
• Additional Reviews
  • The IRS will still process nine out of 10 federal refunds within 21 days. States have their own refund processing timeframes that will vary, and some states may make additional reviews to ensure refunds are being issued properly.

You can learn more about the new IRS identity security changes here and by watching the video below.

How to Protect Yourself

1. Only give out your social security number when necessary. Never give it over the phone or via email. The IRS will not ask you for your social security number over the phone or in an email so any email claiming to be from them is fake.
   

   “We urge people to use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues because scams can take on many sophisticated forms. Keep your personal information secure by protecting your computers and only giving out your Social Security numbers when absolutely necessary.” -IRS Commissioner John Koskinen

2. Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and can automatically update.
3. Encrypt sensitive files such as tax records you store on your computer.
4. Use strong passwords.
5. Learn to recognize and avoid phishing emails. For more info on phishing check out our post Phishing: IRS Scams 2015
6. Do not click on links or download attachments from unknown or suspicious emails.
7. Protect your personal data. Make sure your tax records are secure and don’t regularly carry around your social security card.

If you think your identity has been stolen go to identitytheft.gov for help.