4 common tax scams and ways to avoid them

Tax scams happen year round, but during tax season, the number usually increases (from 27 January to 15 April of this year) From the tax fraud, which last year reported in the tracker scams the Better Business Bureau, 61% were disclosed during the first four months of the year, according to Cnbc.

4 распространенных налоговых мошенничества и способы уберечься от них

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Young Americans often lose money due to fraud.

According to the Federal trade Commission in 2019, last year, almost one in three Americans aged 20 to 29 years reported the loss of money through fraud. Meanwhile, only about 13% of them reported losses due to fraud. According the IRS Internal Revenue Service (IRS), 2013, tax fraud cost the victims more than $23 million.

The most common type of fraud — identity theft. Last year the Federal trade Commission (Federal Trade Commission, FTC) received more than 650 000 individual reports of identity theft. Often, this type of fraud to tax fraud.

Below we describe the four most common types of fraud associated with taxes that you may face, and explain how to avoid becoming their victim.

  1. Scammers tax services

Although the majority of tax professionals provide honest and legitimate services, there are the bad guys. Fraud coming from these individuals, may occur in several ways. Sometimes unscrupulous preparer prepares tax returns using false information to increase the refund amount. While others are trying to steal personal information recorded in tax documents.

  1. Phishing

Phishing, which involves using fake emails or web sites to obtain personal information occurs all year round. Usually the hackers sent so-called phishing e-mail, which mimic email of a shop, company or friend and add a link to a fake portal, requesting your data.

Tax season is a time of year when data begin to be offered for sale with tax fraud, says Emily Wilson, Vice-President for research at the company for the protection of digital risk Terbium Labs.

“Those who buy such information may use it not only for tax but also for other types of fraud, says Wilson. — “In some cases, these records are resold”.

  1. Phone Scam

Probably the most common tax Scam — telephone scams where criminals are posing as IRS agents, calling you and threatening everything from arrest to deportation if you do not pay the allegedly overdue tax bill. According to the IRS, they “remain a constant threat to taxpayers”.

Last year, the scammers are “forged” office phone number IRS Taxpayer Advocate Service so their calls can be mistaken for the real thing. These calls were determined as from the IRS. But keep in mind that the IRS will never require immediate payment using debit cards, gift cards or Bank transfers. If you do owe money, the IRS first sends you a bill in the mail.

  1. Tax theft

Typically, this occurs when a crook uses your information to obtain a refund from the IRS before you even submit his Declaration. Criminals usually at the beginning of the season, get your social security number and personal information to file fraudulent tax returns. Sometimes scammers use the information for a deceased taxpayer, to try to get a refund.

You can also see a variant of this Scam, when someone stole your social security number and work without paying taxes. Another common form of identity theft during tax season — when someone says that your children are dependents.

How to protect yourself from tax fraud

There are dozens of steps you can take to avoid becoming a victim of tax scams and protect your information. But not everyone has the time (or patience) to go to extremes. Here are seven simple ways to protect yourself, which should fix many common threats. And if you suspect that you are a victim of fraud, report it to the inspector General of the Treasury for tax administration by telephone 1-800-366-4484.

  1. Submit your Declaration as early as possible

If you haven’t filed a tax return, then do it as soon as possible. According to Wilson, the system of tax filing is in some ways a “first come, first served” basis. Submitting the Declaration before you will be able to defeat the criminals.

“The criminals understand that if they file a tax return, which looks quite legitimate, they will receive payments before the IRS finds out,” says Wilson.

  1. Keep social security number safe

According to James Lee, chief operating officer of the Resource center for identity theft, during a recent webinar on tax fraud talked about a number of identity theft. “It all starts with the fact that someone has your social security number,” he says. This information could fall into the hands of fraudsters, for example, if you lose your smartphone or wallet.

Leave any documentation with your social security number home and be sure to lock your smartphone, recommends Lee. If possible, avoid downloading sensitive data on your devices.

  1. Protect your registration

Keep your tax returns away from the hands of thieves. If you submit the Declaration online, please submit via a secure connection — do not register their taxes using a public Wi-Fi. If you apply on paper, take your taxes directly to the post office and send them by mail. Thus, from the mailbox no one can steal your tax forms that contain a lot of personal data. Unfortunately, there were cases when thieves steal tax returns directly from the personal mailbox.

  1. To know about possible data leaks

“Data leakage is an important source of information that people need to steal your tax information or start the process of theft,” says Lee. Even if the cybercriminals have a few pieces of information, they can attack you using phishing attack (which can be more than just a fake email) to get the rest.

When reported the data breach, make sure you have taken appropriate steps to protect your information, including changing passwords, monitoring your credit reports and following the rules of cyber hygiene.

  1. Pay attention to signs of fraud

If your social security number has been lost or stolen, you are at greater risk of theft of tax information. If you experience any of the following situations, pay attention to it, report it and avoid the transmission of any information to the sender:

  • You receive a letter supposedly from the IRS about a tax return that you filed.
  • You can’t send your tax return because of duplicate social security numbers.
  • You receive notification that your name created the online account with the IRS or that your existing account was opened or disabled, if you have not taken such action.
  • You will receive a notification that the IRS records indicate that you received wages from an employer for whom you worked.

Keep in mind that the IRS does not initiate contact via email, text messages or social media channels to request personal or financial information. If they really need to contact you, they will first send you a regular letter.

  1. Work only with conscientious drafters

“When you are looking for someone who will help you with filing taxes, make sure that you are dealing with a reputable company and a trusted provider,” says Lee.

Qualified professionals will have a tracking number, which you can find on the website of the IRS.

  1. To freeze your credit

If you block your credit reports, no one will be able to take a credit card or loan in your name. Plus, it’s free. Freezing your credit in the first place will not allow criminals to use it.

You also have to put a freeze on loans children or any minors in your family. You will need to contact the three main credit bureaus Equifax, Experian and TransUnion individually to request this lock. As a rule, you need to confirm your identity and to provide a copy of the birth certificate of the child or social security card.

In addition to these steps to protect yourself, Wilson advises Americans to remain vigilant all year round.

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