Scams and Identity Theft

There was a noticeable increase by scammers this tax season to steal the identities of taxpayers.  Several clients received telephone calls threatening penalties and even arrest at their home if they did not immediately provide payment information.  Other attempts to steal identities came through so-called email phishing attempts.  The word “phishing” is computer hacker slang for “fishing” where criminals attempt to “catch” a person’s personal and financial information, including logins and passwords to financial accounts.  Other problems with tax identity theft were revealed when attempts to electronically file tax returns were rejected for the reason that a tax return had already been submitted under the client’s Social Security number, or when the IRS sent a letter indicating suspicious activity on the tax account.  Given the increase in tax scams and identity theft, you should be aware of how the IRS will contact you and what you can do to protect yourself and your information.

·       The IRS will contact you by U.S. mail.  The IRS will not call you to demand immediate payment and threaten to show up at your residence and arrest you.  The IRS will not call you to verify your W-2 or other tax return information, they already have this information.

o   If you receive such a phone call, simply hang up, don’t talk or reason with the person.  If they call back, block their number.

o   Criminals can “spoof” their caller identification information to make it look like they are calling from the IRS or a state tax agency.

o   You can report the incident to the IRS by calling 1-800-366-4484.

·       The IRS will give you an opportunity to review the reasons for any additional tax and to provide information to dispute their findings.

o   If you know that you owe back taxes, don’t let that fact “guilt” you into responding to the scammer’s attempt to gain your information.  Instead, work with your tax preparer or contact the IRS directly at 1-800-829-1040 to make payment arrangements.

·       The IRS will not contact you by email asking for tax information.

o   If you receive a such an email, do not reply and forward it to phishing@irs.gov then delete the message.  Also, be sure never to open any attachments to the email or your computer may become infected with a virus or other computer code designed to steal your information.

·       Protect your financial information by keeping your software up to date and use good anti-virus and anti-spyware software.  Use strong passwords and change them occasionally.

o   A password manager like LastPass is a good option to consider in order to be able to use strong passwords that you otherwise will not be able to remember.

·       If you suspect tax identity theft, complete Form 14039, Identity Theft Affidavit, and send to the IRS.  The IRS will issue you a six-digit identity protection personal identification number, IP-PIN, that you will need to use to submit your tax return.  A new IP-PIN is issued each year.  Be sure not to lose the number because it is very difficult to replace it.  Provide the IP-PIN to your tax preparer.

o   Understand that if the IRS suspects tax identity theft, your tax refund could be delayed by many months as they work to determine the correct identity.

o   If your tax identity has been stolen, there is a good chance that your other financial information is at risk.  You will want to immediately change financial account passwords, alert the credit rating agencies, and take other necessary steps.  Further information about identity theft can be found here.