Tax season is the one time of year that a lot of sensitive personal data is on the move. Employers and financial institutions are sending you tax documents, you are then transmitting them to your accountant or using tax filing software. Take care to safeguard that data every step of the way. Tax season is already stressful enough, individuals increasingly have to contend with the possibility of fraud or identity theft involving their tax return. Tax return fraud is a huge problem for U.S. citizens.
“Tax-return fraud is a mounting problem. In 2013, according to a Government Accountability Office report released last year, the Internal Revenue Service thwarted $24.2 billion in fraudulent refunds requested — but paid out $5.8 billion.”
Scammers can easily whip individuals into a panic, aggressive efforts to steal data and cash by masquerading as IRS officials. Some scam artists try to convince you that you are a victim of a fraudulent return and need to verity your personal information. Others threaten audits, fines, arrests and all manner of other dire consequences to victims who don’t wire cash immediately or click-through a link to confirm their personal information.
Here’s a conspicuous flaw in the system as currently set up: To file a tax return electronically, all someone needs is a name, date of birth and an SSN. The IRS accepts tax filings as soon as Jan. 1, but employers aren’t required to submit correct employment information to the agency until March, by which time roughly half of all refunds have been paid out. (For that matter, the IRS doesn’t begin matching employer-submitted data to tax returns until the summer.)
You might see official-looking seals and language in an email that have been pulled from legit IRS communiques, or hear background noise in a voice mail meant to resemble a call center. Don’t click on any links in emails or call back any numbers left for you in a voice mail. Pushing calls and emails are the easiest tax fraud to avoid. Your best defense, keep calm and think it through.
“The IRS and the CRA have said repeatedly that its first point of contact with you is going to be by mail. Not an email and not a phone call.”
The agency has suspended processing of 4.8 million suspicious returns so far this year, worth $11.8 billion, the IRS said in an email to CNBC. Among that number are 1.4 million returns with confirmed identity theft, totally $8.7 billion.
- Not receiving an expected form could be a red flag of old-fashioned mail theft.
- Make a check list of documents or forms with the approximate date that they should have arrived.
- Use a secure file service to transmit documents electronically to your tax preparer
- Avoid sending tax information by email
- Personally drop off documents to your tax preparer.
- Delays in receiving last year tax refund could signal that you could have been targeted by scam artists.
When in doubt, your best bet is to hang up. Contact the entity directly through a phone number that you know is legitimate or by email. Even if you’re not a victim, be aware that government authorities have put in place safeguards to thwart tax fraud which could delay your refund or snarl your return.
This post was inspired by my daughter who reminded me that sending tax information via email isn’t very safe.