There is one time of year that I dislike more than any other—tax time. I’m sure there are plenty of reasons that other people dislike tax time, too, but here’s one more: identity theft. Statistics show that during 2008, there were more than 500 web sites responsible for hundreds of thousands of tax related scams emails in nearly 1500 different scams. And you can bet your refund that this year, there will be more scams and more identity theft that during past years.
Tax Time Identity Theft Scams
Phishing, especially, has grown in occurrence and complexity. But in addition a down economy, tighter restrictions on credit, and a general feeding-frenzy of identity theft will fuel an increase in tax-time scams and schemes. Among the scams you might see this year are:
- Emails that promise a refund you might or might not be due. Usually, these emails include links which lead to a form you’re asked to fill out. Among the information requested are personal details as well as banking or credit information.
- Emails notifying you that you’re being audited or have been audited. These emails also include a link which leads to a form you’re asked to fill out requesting personal and banking information. In the case of a “completed audit” resulting in fees and penalties, you may be asked to provide payment information.
- Emails or telephone calls to verify your citizenship status. These messages usually request that you provide personal information to verify your citizenship status. The information can include your Social Security number or other private information.
- Confirmation phone calls from someone claiming to be an IRS representative who needs to verify your personal and banking information before you tax refund can be released. Sometimes the caller claims the reason verification is needed is because you were previously sent a check that has not been cashed.
- Emails about “changes to tax laws” that include a downloadable document (usually in PDF format) that are supposed to explain the new tax laws. These downloads are populated with malware that, once downloaded, will infect your computer.
In addition to these five scams, there are likely to be new ones that appear as the tax season stretches on. Some of them may be more sophisticated than these scams. And of course, you always have to worry about the usual identity theft methods.
Protecting Your Identity From Tax Time Scams
Here are some ways that you can protect yourself from tax time scams as well as during the rest of the year:
- Understand how the IRS and other agencies communicate with constituents. According to the IRS web site, you will never receive an email or telephone communication from them requesting personal information. The IRS does business the old fashioned way; though the mail. So if you receive an email or phone call that seems to be from the IRS, don’t respond. For phone calls, hang up and call 1-800-829-1040 and ask about the call you receive. Forward any emails you receive that seem to come from the IRS to phishing@irs.gov.
- Know what’s required. The IRS never requires additional forms or information to be submitted for you to receive your refund from them. Normal tax return forms are sufficient and include all of the information that the IRS needs from you. You’ll never be asked to fill out additional forms before your refund is released.
- Beware of paper communications, too. No scams have been reported that are regular mail-based, however, you should always be aware of the dangers that are inherent to postal mail. Protect your identity by using safe mail handling practices.
- Know who you’re hiring. If you plan to hire someone to prepare your taxes, make sure you know who it is. Many online tax preparation companies spring up around tax time, some of them nothing more than a scam. Even real world tax preparers can be criminals, too. Take the time to check out your tax preparer before you give them access to your personal and financial information.
- Protect your computer. If you plan to file your taxes online, be sure you have current anti-virus, anti-spyware, and firewall protection installed. This applies even if you’re not filing your taxes online. Also be sure to password protect files before storing them on a hard drive or transmitting them electronically.
Tax time is stressful enough. Don’t let identity theft make it any more stressful than it has to be. Be aware of the risks that you might face and be diligent about protecting your personal information, both in the real world and online. Then, when tax season is over, you can enjoy your refund in peace.