Tax season is here, and so are online identity thieves. Con artists use the Social Security numbers of unsuspecting Americans to file phony tax returns and steal refunds. One way to protect this information is to use an Identity Protection PIN issued by the IRS. In fact, a number may have been issued to you last year if you filed a return online.
How the Scam Works
Online filers that go through the IRS website usually expect a refund. Instead, a written IRS notice arrives in the mail, stating that more than one tax return was filed using your Social Security number.
What happened? Scammers got hold of personal information, typically the account holder’s Social Security number, address, and birth date. They filed your return early and received your refund before you even got around to filing. Tax ID theft is a particularly sneaky con, because victims typically don’t realize they’ve been targeted until they actually file their taxes.
Scammers steal tax information in several ways, such as with a phishing scam, a corrupt tax preparation service, or the information was exposed in a hack or data breach. Sometimes tax scammers file in the name of a deceased person or steal children’s identities to claim them as dependents.
Tax Identity Theft Scams
One tax scam to look out for is tax identity theft. This occurs when a scammer uses your government-issued identity number (Social Security number) to file a tax return in your name and collect your refund. It can also be someone using your information to get a job. Consumers don’t usually realize they have been victims of tax identity theft until they get a written notice from the IRS saying that more than one tax return was filed, or they were paid by an employer they don’t know.
Email Phishing Scams
In phishing scams, the emails appear to be from the IRS and include a link to a bogus web site intended to mirror the official IRS web site. These emails contain the direction “you are to update your IRS e-file immediately.” The emails sometimes mention USA.gov and IRSgov (without a dot between “IRS” and “gov”) Don’t get scammed. These emails are not from the IRS.
Tips to Avoid Tax Scams
- The best way to avoid tax identity theft is to file your taxes as early as possible. File before a scammer has the chance to use your information to file a fake return.
- Watch out for red flags. If a written notice from the IRS arrives in the mail about a duplicate return, respond promptly. Or, if an IRS notice arrives stating you received wages from somewhere you never worked, or receive other notices that don’t actually apply to you, contact the IRS office immediately. Another big red flag is if you receive a notice that “additional taxes are owed, the refund will be offset or a collection action is being taken against you for a year you did not file a tax return” (IRS). Contact the IRS if you have any suspicions that your identity has been stolen.
- Protect your Social Security number. Don’t give out your SSN unless there’s a good reason, and you’re sure who you’re giving it to.
- Research your tax preparer. For many people, major life changes, business ownership, or simply a lack of knowledge about the ever-changing tax laws make finding a trustworthy tax preparer a good idea. That said, not all tax preparers have the same level of experience and training. Make sure your tax preparer is trustworthy before handing over your personal information. See BBB’s tips for finding the right tax preparer for you.
- Jot down your Identity Protection PIN (IP PIN) from the IRS before you file your return. This is a six-digit number, which, in addition to your Social Security number, confirms your identity. It is important to note that you cannot opt-out once you get an IP PIN. So once you apply, you must provide the IP Pin each year when you file your federal tax returns. The IRS will provide your IP PIN online and then send you a new IP PIN each December by postal mail. Visit the IRS for more information about the program. Read BBB’s tips about the IRS PIN.
The IRS does not initiate contact with tax payers by email, text message or social media to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.
- Check out websites carefully and make sure you are accessing the real IRS website when filing your taxes electronically or inquiring for additional information.
- If you are the victim of tax identity theft in the U.S., contact the IRS at 1-800-908-4490. You should also file a complaint with the Federal Trade Commission (FTC) at ftc.gov/complaint or by calling 1-877-FTC-HELP. The FTC also offers a personalized identity theft recovery plan at identitytheft.gov.
- If you get tax information delivered electronically from your employer or other entity, treat that information carefully. Download it onto a password-protected computer.