Tax season is in full swing – and that means scammers are on the hunt.
Tax scams usually increase early in the year when taxpayers begin filing their returns with the IRS. (Tax season began Feb. 12.) They also flare up during times of crisis, like the Covid pandemic, according to the federal agency.
Scammers may be more active this year compared to previous tax return windows, exacerbated by the delayed start to the season, experts said.
“It’s just the perfect storm we’re dealing with right now,” said Howard Silverstone, a forensic accountant and member of the American Institute of Certified Public Accountants’ Fraud Working Group.
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Tax experts say much of the fraud is usually identity theft. In such cases, a criminal can steal personal information to file a false tax return and collect your refund.
According to the IRS, taxpayers can also unknowingly provide personal information to criminals who falsely claim they can help collect incentive checks. Congress is aiming to pass a $ 1.9 trillion Covid bill by mid-March, including $ 1,400 stimulus checks.
“Thousands of people have lost millions of dollars and their personal information due to tax scams,” the IRS said.
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 agency. Identity theft was the most reported fraud in 2020, the FTC said.
Tax identity theft
Criminals often make contact by phone and email to rip off unsuspecting victims.
For example, with IRS fraudsters, a scammer might impersonate an IRS agent and try to intimidate callers into disclosing sensitive information. Phishing scams aim to obtain data such as account information and passwords from fake websites, text messages and emails.
However, the IRS will not launch contacting taxpayers via email, text message or social media channels to request personal or financial information. The agency also won’t call to demand immediate payment – officials will generally first send a bill to any taxpayer who owes tax.
One surefire way to reduce the chance of fraud is to file tax returns as soon as possible.
“We’re in tax season now,” said Silverstone. “Don’t delay.
“Once you file your tax return, you minimize the chance that someone else has stolen your identity and does so.”
What should victims do?
There are several steps that victims of tax-related identity theft should take, depending on whether the taxpayer reports the fraud (for example, if your electronically filed return is rejected due to a double return) or whether 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) asking you to verify your identity. You may need to call a toll-free number and may need to visit an IRS Taxpayer Assistance Center.
When reporting an incident, file a paper tax return. Complete an Identity Theft Statement (Form 14039) and affix it to the back of your paper return. The IRS can open a case and assign it to an identity theft specialist.
Taxpayers will eventually receive a notification that their 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 are placed in the Identity Protection PIN program and receive a new six-digit PIN every year.
Consumers should also contact their state tax authorities for additional steps at the state level.
They should also consider freezing their credit with the credit reporting companies (such as Equifax, Experian and TransUnion). These can always, permanently or temporarily, be canceled later.