Don’t Let Tax Theft Crooks Steal Your ID

New campaign highlights tax theft risks: Internet Scambusters #735

After labeling identity theft as the number one scam in our Top 10 just a few weeks ago, we’re putting one of the main reasons behind it in the spotlight this week — tax theft.

As the tax season picks up pace, the IRS and the Federal Trade Commission are launching a new campaign to highlight the risks.

We’ll explain what you need to do to protect your Social Security number and other key information from the crooks and the action you should take if you discover someone has fraudulently claimed your refund.

Before we begin, you may want to spend a moment looking at this week’s most popular articles from our other sites:

Emergency Preparedness — Are You Ready? Use this checklist and get your emergency preparedness plan and kit together.

Getting the Debt Help You Need: Here are four signs that you may need debt help so you can go in search of the help you need.

Busting Four Common Allergy Myths: Nearly everybody has allergies and in this article, we’ll take a look at a few common ones, and bust each with a quick shot of truth.

Now, here we go…


Don’t Let Tax Theft Crooks Steal Your ID


One of the biggest sources of consumer scams during the past two years has been tax theft.

It’s not so much that the crooks have come up with new tricks. It’s more that they find the scams easy to pull off, with both the IRS and taxpayers handing over money to them.

We’re approaching the height of the tax filing season — more than 100 million returns are due to be filed — and January 23 marks the start of Tax Identity Theft Awareness week. So, it’s a good time to check that you’ve taken all possible steps to protect yourself from the scammers.

Probably the biggest rise in tax-related scams has been the huge surge in calls and emails pretending to come from the IRS, telling victims they owe money, which they must pay immediately or face jail.

Remarkably, most people who fall for this scam probably don’t actually owe taxes but the messages are so convincing and intimidating they just pay up.

There are two simple ways to spot this scam.

First, the IRS doesn’t behave this way. They don’t phone or email people to say they owe money and they don’t threaten to send them to jail.

And second, the crooks always want victims to pay by an untraceable method such as money wires, prepaid debit cards or even iTunes gift cards.

If you get a call like this, you can be 100% sure it’s a scam.

The other major source of tax theft scams has to do with the subject of the forthcoming awareness campaign: scammers posing as taxpayers and claiming their refunds.

The U.S. Federal Trade Commission (FTC) blamed tax scammers for the biggest part of a near 50% rise in identity theft complaints in 2014.

The agency received close to half a million complaints that year and labeled tax refund fraud as “the largest and fastest growing ID theft category.”

Meanwhile, the IRS said last March, a month before last year’s tax filing deadline, that it had spotted more than 42,000 fraudulent claims worth an estimated $227 million.

But this was likely just the tip of the iceberg because, in the prior year, the IRS said it had confirmed more than a million fake returns, halting the issuance of $6.8 billion in fraud!

Understanding Tax Identity Theft

So, what exactly is tax identity theft and what can you do to reduce the risk of being caught out?

The IRS defines the crime as: “(W)hen someone uses your stolen Social Security number (SSN) to file a tax return claiming a fraudulent refund…

“You may be unaware this has happened until you e-file your return and discover that a return already has been filed using your SSN. Or the IRS may send you a letter saying it has identified a suspicious return using your SSN.”

That last bit is important because it underlines how the IRS notifies you about the possibility of a fraudulent return — in writing. And it’s also important to know that the letter does not ask you for your SSN.

This is crucial because scammers have actually been using a fake email and phone notification process to try to get victims to give them their SSN. If someone contacts you and asks you for your number or to confirm your number, don’t give it to them. It’s a scam!

As for protecting yourself against identity theft, here are the key rules:

  • Don’t carry your Social Security card with you.
  • Don’t give your number to someone claiming to be from the IRS. In fact, don’t give it to anyone unless you are 100% sure of who they are and why they need it.
  • If you’re using your computer to prepare your return, make sure you have up to date security software.
  • Again, beware of emails or phone calls purporting to be from your tax preparation software company — don’t answer questions that involve giving away personal information.
  • Don’t click on links or attachments on emails or websites unless you know they’re secure — otherwise you can download spyware onto your PC.

If you discover you’ve been caught out by the scammers, you should contact the FTC and contact the three main credit bureaus: Equifax, Experian, and Transunion.

Also, close any accounts that have been opened by the scammers.

If your electronic filing is rejected because you’re told your return has already been filed, complete and submit an IRS form 14039 Identity Theft Affidavit.

Just to be clear, here’s the final word from the IRS: “The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as a text message (or) social media channel.”

The agency also has a special publication on security awareness for taxpayers: Security Awareness For Taxpayers.

Alert of the Week

That new camera or gadget that you got for Christmas — does it need a micro-SD memory card?

If so, beware of unbelievable bargain prices on eBay because that’s just what they are — unbelievable.

According to The Counterfeit Report, these ultra-cheap cards usually have nowhere near the claimed memory, so when you’re saving data to them, the new data simply overwrites the existing material, which is then lost forever!

That’s it for today — we hope you enjoy your week!