Getting your taxes organized and filed is more than enough to handle without worrying if your personal information is vulnerable to scammers looking to cash in at your expense. Criminals may file fraudulent tax returns under your name to steal your refund or even pose as threatening IRS agents on the phone to try to scare you into making immediate payments with a credit card.
The good news is the IRS has seen steep declines in tax-related ID theft. Reports from taxpayers who claimed they were victims of ID theft dropped by 40 percent between 2016 and 2017. Despite ramped-up security efforts, taxpayers still must be cautious as scammers look for new ways to create headaches during tax season. Warning signs to look for if you think something may be suspicious include:
- Notification that your e-filed tax return was rejected because a return with your Social Security number (SSN) already has been filed.
- Receiving a letter from the IRS asking for confirmation on submission of a tax return being held for review.
- Getting a call from someone claiming to be with the IRS and threatening legal action if you don’t make a credit card payment now.
- Being informed in writing by the IRS that records of wages were received from an employer that you did not work for.
For reference, the IRS does not:
- Contact people by phone and ask for credit card information or demand immediate payment using a prepaid debit card, gift card or wire transfer.
- Call you about your tax bill without first sending you a bill in the mail.
- Threaten to bring in local police and have you arrested for non-payment or threaten to file a lawsuit against you.
- Demand you pay taxes owed without questions or the ability to appeal.
Remember, scammers may call using IRS caller IDs to appear legitimate. To help ensure a smooth tax season, here are a few steps to keep in mind.
Tax ID Theft Prevention Steps
- File your tax return as early as possible.
- Arrange for your tax information forms (W-2s, 1099s, etc.) to be delivered to you electronically during tax season.
- Monitor your credit report for unusual activity.
- Avoid using public wi-fi internet connections to send private information.
- Shred old financial documents.
- Make sure to encrypt any tax information sent via email with a password.
What to do if Tax Fraud Happens?
If the worst does happen and you become a victim of tax fraud and/or identity theft, help is out there. Taxpayers should file Form 14039 – the Identity Theft Affidavit – if their tax return is rejected because another return listing their SSN already has been filed. Also, Identitytheft.gov is the Federal Trade Commission’s go-to resource for anyone having to begin the step-by-step process of reporting identity theft and restoring financial records.
Find a CPA
Partner with a CPA to help guide you through tax season. The Illinois CPA Society has a free “Find a CPA” online directory that allows individuals, businesses and not-for-profit organizations to conduct a simple search for a CPA by location, type of services needed, industries served and language preference.
The Illinois CPA Society, with more than 24,500 members, is one of the largest state CPA societies in the nation. Our mission is dedicated to enhancing the value of the CPA profession through the strategic initiatives of advocacy, information, education and connections.