Tax season is in full swing, and that means scammers are on the prowl.
Tax scams generally spike early in the year when taxpayers begin filing their returns with the IRS. (Tax season started on February 12.) They also flare up during times of crisis, such as the Covid pandemic, according to the federal agency.
Scammers may be more active this year compared to previous tax filing periods, compounded by the late start of the season, experts said.
“It’s like the perfect storm we’re dealing with right now,” said Howard Silverstone, a forensic accountant and a member of the fraud task force for the American Institute of Certified Public Accountants.
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Much of the fraud generally involves identity theft, according to tax experts. In such cases, a criminal could steal personal information to file a false tax return and collect your refund.
Taxpayers can also inadvertently provide personal data to criminals who falsely claim they can help collect stimulus checks, according to the IRS. Congress aims to pass a $ 1.9 trillion Covid relief bill that includes $ 1,400 stimulus checks by mid-March.
“Thousands of people have lost millions of dollars and their personal information to tax scams,” according to the IRS.
More than 89,000 Americans filed a complaint with the Federal Trade Commission last year reporting tax fraud related to identity theft, according to the consumer agency. Identity theft was the most reported type of fraud in 2020, the FTC said.
Tax identity theft
Criminals often communicate by phone and email to try to scam unsuspecting victims.
In IRS imposter scams, for example, a scammer may pose as an IRS agent and try to intimidate callers into disclosing confidential information. Phishing scams aim to obtain data such as account information and passwords through fake websites, text messages and emails.
However, the IRS will not initiate Contact taxpayers via email, text, or social media channels to request personal or financial information. The agency will also not call to demand immediate payment; officials will generally send a bill first to any taxpayer who owes taxes.
One surefire way to reduce the chances of fraud is by filing tax returns as soon as possible.
“We are in tax season,” Silverstone said. “Don’t procrastinate.
“Once you file your tax return, limit the chance that someone else has stolen your identity and done so.”
What should the victims do?
There are different steps that tax-related identity theft victims must take, depending on whether the taxpayer reports the fraud (for example, if their e-filed return is rejected due to a duplicate filing) or if the IRS marks a tax return. suspicious tax with your name. on it, according to the agency.
In the latter case, the IRS will send you a notice or letter (Letter 4883C or 6330C) requesting to verify your identity. You may need to call a toll-free number provided and possibly visit an IRS Taxpayer Assistance Center.
If you report an incident, file a paper tax return. Complete an Identity Theft Affidavit (Form 14039) and attach it to the back of your printed statement. The IRS can open a case and assign it to an identity theft specialist.
Taxpayers will eventually receive notification that their case has been resolved, but it can take a while, usually within 120 days, but complex cases can take at least 180 days, according to the IRS.
Some victims will be placed in the Identity Protection PIN program and will obtain a new six-digit PIN annually.
Consumers should also check with their state tax agency for additional steps at the state level.
They should also consider freezing their credit with credit reporting companies (such as Equifax, Experian, and TransUnion). These can always be lifted, permanently or temporarily, later.