The tax season is in full swing – and that means scammers are on the prowl.
Tax scams usually increase at the beginning of the year, when taxpayers start filing their statements with the IRS. (The tax season started on February 12). They also increase in times of crisis, such as the Covid pandemic, according to the federal agency.
Swindlers may be more active this year compared to previous tax filing windows, compounded by the delay in the start of the season, experts said.
“It’s like the perfect storm we’re dealing with now,” said Howard Silverstone, a forensic accountant and a member of the American Institute of Certified Public Accountants’ fraud task force.
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Much of the fraud involves identity theft, according to tax experts. In such cases, a criminal may steal personal information in order to file a false income tax return and receive your refund.
Taxpayers may also inadvertently provide personal data to criminals who falsely claim that they can help collect stimulus checks, according to the IRS. Congress plans to pass a $ 1.9 trillion Covid relief bill that includes $ 1,400 stimulus checks by mid-March.
“Thousands of people have lost millions of dollars and their personal information in tax fraud,” according to the IRS.
More than 89,000 Americans filed a complaint with the Federal Trade Commission last year, reporting tax fraud related to identity theft, according to the consumer protection agency. Identity theft was the most reported type of fraud in 2020, the FTC said.
Tax Identity Theft
Criminals often contact each other by phone and email to try to steal innocent victims.
In IRS impostor scams, for example, a con man can impersonate an IRS agent and attempt to intimidate callers into disclosing confidential information. Phishing scams aim to obtain data such as account information and passwords through fake websites, texts and emails.
However, the IRS will not initiate contact contributors via email, text message or social media channels to request personal or financial information. The agency will also not call to demand immediate payment – employees usually send an invoice to any taxpayer who owes taxes first.
A surefire way to reduce the chances of fraud is to file tax returns as quickly as possible.
“We are in the tax season now,” said Silverstone. “Don’t procrastinate.
“Once you file your tax return, you limit the opportunity for someone else to steal your identity and do so.”
What should victims do?
There are different steps that tax-related identity theft victims must take, depending on whether the taxpayer reports fraud (for example, if their electronic statement is rejected because of a duplicate order) or if the IRS flags a suspicious tax return. with your name on it, according to the agency.
In the latter case, the IRS will send a notice or letter (Letter 4883C or 6330C) requesting verification of your identity. You may need to call a toll-free number provided and potentially visit an IRS Taxpayer Assistance Center.
If you report an incident, complete a paper income tax return. Fill out a Declaration of Identity Theft (Form 14039) and attach it to the back of your paper return. The IRS can open a case and assign it to an identity theft specialist.
Taxpayers will receive notification that the case has been resolved, but it can take a while – usually within 120 days, but complex cases can take at least 180 days, according to the IRS.
Some victims will be placed on the Identity Protection PIN program and will receive a new six-digit PIN annually.
Consumers should also check with their state tax agency for additional steps at the state level.
They should also consider freezing their credit with credit reporting companies (such as Equifax, Experian and TransUnion). They can always be lifted, permanently or temporarily, later.