CHICAGO, February 28, 2017 – Identity theft is often the first step leading to an equally painful, if not a bigger, headache of falling victim to tax fraud. Scammers who stole your personal information may have already filed a tax return in your name and collected a refund without you even knowing it.
How big of a problem is tax fraud? More than 1.8 million fraudulently filed returns were identified by the Internal Revenue Service (IRS) in 2015 – totaling a whopping $12.3 billion in fraudulent refunds. However, the IRS stopped more than $11.4 billion in potential fraudulent payouts.
To help taxpayers steer clear of tax return fraud, the Illinois CPA Society outlines some common tactics fraudsters use to deceive people into providing personal information, including posing as an IRS official.
What Scammers Don’t Want You to Know
Some of the sophisticated methods criminals rely on to trick people include spoofing caller ID readouts to make it appear a call is coming from the IRS. There are also “phishing” scams – where regular mail and emails asking for your updated information are distributed. They contain official IRS logos, contact information and are made to look real, but are not. Taxpayers as well as tax practitioners are often targets of phishing scams.
In addition to never contacting taxpayers by email, text messages or social media channels to request or confirm personal or financial information, the IRS also warns it does not:
- Use scare tactics: Making threats of arrest, confiscation of professional licenses and even deportation in order to get you to make an immediate payment
- Call you about your tax bill without first sending you a bill in the mail
- Demand you pay taxes owed and not allow you to question or appeal the amount
- Require that you pay your taxes a certain way (prepaid debit card or specific type of payment)
- Ask for credit or debit card numbers over the phone
- Threaten to bring in police or other agencies to arrest you for not paying
- Threaten you with a lawsuit
Initial contact by the IRS usually happens in a letter through regular mail. If you believe you’re the target of a phishing scam, you can forward it to firstname.lastname@example.org. Additional details are at the IRS Tax Scams/Consumer Alert web page.
Monitoring your credit report for unusual activity, not using public Wi-Fi connections to send private information and shredding old financial documents are a few ID theft prevention steps that may help stop tax fraud. And during tax season, having your tax forms delivered to you electronically and filing returns early can also help thwart criminals.
What to do if Tax Fraud Happens?
If the worst does happen and you become a victim of tax fraud, help is out there.
Identitytheft.gov is the Federal Trade Commission’s go-to resource for anyone needing to begin the step-by-step process of reporting identity theft and restoring your financial records. Additional information is available at www.irs.gov.
Your local CPA can also provide strong assistance in helping you recover from tax fraud. Find a CPA near you by visiting icpas.org.
About the Illinois CPA Society
The Illinois CPA Society, with more than 24,000 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.