The tax season is in full swing, and that means scammers are on the rise.
Tax scams usually increase earlier in the year when taxpayers begin filing their return with the IRS. (The tax season began Feb. 12. They also occur in times of crisis, such as the Covid pandemic, according to the federal agency.
Scam artists may be more active this year in relation to previous tax filing windows, exacerbated by the delayed start to the season, experts said.
“It’s like the perfect storm we’re dealing with right now,” said Howard Silverstone, a forensic accountant and member of the fraud working group at the American Institute of Certified Public Accountants.
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Much of the fraud usually involves identity theft, according to tax experts. In these cases, a criminal can steal personal information to file a false tax return and collect the refund.
According to the IRS, taxpayers can also inadvertently provide personal data to criminals who falsely claim they can help collect stimulus checks. Congress aims to pass a $ 1.9 trillion Covid relief law that includes $ 1,400 stimulus control in mid-March.
“Thousands of people have lost millions of dollars and their personal information due 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 contact by phone and email to try to ruin unsuspecting victims.
For example, in IRS impostor scams, a scammer can impersonate an IRS agent and try to intimidate callers into revealing sensitive information. Fishing scams aim to obtain data such as account information and passwords through fake websites, texts and emails.
However, the IRS will not initiate contact taxpayers via email, text messages or social media channels to request personal or financial information. The agency will also not call to demand an immediate payment: officials usually send an invoice for the first time to any taxpayer who has taxes.
An infallible way to reduce the chances of fraud is by filing tax returns as soon as possible.
“We’re in fiscal season now,” Silverstone said. “Do not postpone.
“Once your tax return is filed, limit the chance that someone else has stolen your identity and done so.”
What should victims do?
There are different steps that victims of tax-related identity theft should take, depending on whether the taxpayer reports the fraud (for example, whether the return filed by email is rejected due to a duplicate) or if the IRS marks a suspicious tax return in your name accordingly, according to the agency.
In the latter case, the IRS will mail you a notice or letter (letter 4883C or 6330C) requesting verification of your identity. You may need to call a toll-free number provided and potentially visit an IRS taxpayer assistance center.
If you report an incident, file a paper return. Fill out an affidavit on identity theft (Form 14039) and attach it to the back of the paper statement. The IRS can open a case and assign it to an identity theft specialist.
Ultimately, taxpayers will receive a notification that their case has been resolved, but it may take a while, usually within 120 days, but complex cases can take at least 180 days, according to the IRS.
Some victims will join the Identity Protection PIN program and get a new six-digit PIN each year.
Consumers should also consult with their state tax agency for additional measures at the state level.
They should also consider freezing their credit with credit reporting companies (such as Equifax, Experian, and TransUnion). They can always be lifted, permanently or temporarily, later.