Update on Tax Identity Theft

Tax identity theft has been a threat for many years affecting millions of taxpayers. 

There are various schemes used by scammers including phone calls and phishing text messages and emails. In recent years, however, we have seen a decrease in successful tax identity theft attacks due to education and some precautionary actions taken by the IRS. Still, it is important to be aware of these threats.

How does tax identity theft happen?

Phone scams are one of the most common tactics used by identity theft fraudsters. You have likely received one of these fake calls over the years, appearing to be from the IRS and demanding money for tax debts. The scammers create a sense of urgency and fear that results in many giving over money or personal information. It is important to remember that the IRS will contact you via letter if there is something wrong with your tax information, not over the phone.

Phishing messages are also a widely used method of scamming taxpayers. These messages may appear to come from the IRS or even your bank or tax preparer. For instance, some consumers reported receiving phishing emails from their tax preparer last year that either asked for personal information or requested that they download an attachment. Again, remember that the IRS will not contact you via email. If you receive something from your bank or accountant, be sure to call and confirm that they really sent it.

How to protect yourself?

In addition to being aware of the tax scams that exist, there are steps you can take to help lock down your tax return. A few years ago, the IRS introduced Identity Protection PINs (IP PINs) to help protect taxpayers. IP PINs are six-digit numbers that prevent someone else from filing a return in your name. You must submit your PIN to verify your return.

When IP PINs were first introduced, they were only available to proven victims of identity theft or residents of certain states. Now, anyone can apply for an IP PIN. You can request the IP PIN on the IRS website. You will need to prove your identity by answering some questions.

Once you are set up with an IP PIN, you will receive a new one each year. It will be available in your online IRS account so be sure to protect that with a strong password. You or your tax preparer will submit your IP PIN when you sign and submit your return.

Don’t send personal information (W-2s, 1099s …) by email attachment. Email is not a secure form of communication. The best practice is to either delivery your tax documents to your tax preparer or transmit via a secure link provided by the firm. If you do send personal information by email attachment, redact (blot out or cut out) Social Security numbers.

Similar posts