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The week of January 29th through February 2nd has been designated as National ID Theft Awareness Week, and with the Internal Revenue Service (IRS) also officially opening up tax season this week, this is the perfect time to focus on tax related ID theft scams.
Tax scams reappear often, each time with a slightly different spin. But overall, the two primary types of tax related ID theft schemes to watch out for involve IRS impersonators and false tax return filings.
IRS Impersonation Scams: These scams most often start with a phone call and take two basic forms. In the first version, the person claiming to be an “IRS agent” says you owe back taxes and pressures you into paying by prepaid debit card or wire transfer. If you don’t comply, the scammer threatens you with arrest and fines.
In the other version, impostors falsely claim they are issuing you a tax refund and ask for your personal information, indicating it’s needed to allow them to send your refund. This information can later be used for identity theft. Scammers also use this approach to target college students by claiming a “federal student tax” has not been paid.
These imposters often go to great lengths to appear real. The scammer may give a fake badge number and name. Your Caller ID may look like the call is coming from Washington, D.C. or even say that the call is from the IRS, thanks to spoofing software. Con artists sometimes follow up scam calls with an email, falsely using the IRS logo, colors, and official-sounding language. In many instances, these scams start with a serious and official sounding “robocall” recording.
Like many scams, these are designed to pressure you to act quickly. Here’s some significant differences between an experience with the IRS and how scammers will try to approach you with a tax scam:
• The IRS will give you the chance to ask questions or appeal what you owe, while scammers try to push you into action before you have time to think.
• The IRS will always make their first contact with you by mail. Scammers will typically call, text, or email.
• Scammers will push for payments through wire transfer, a prepaid debit card, or other non-traditional payment methods that are largely untraceable and non-reversible. The IRS will never demand immediate payment, require a specific form of payment, or ask for credit card or debit card numbers over the phone.
The IRS may call you about outstanding debts after first attempting to reach you by mail. See BBB’s tips on IRS calls to tell if the IRS is really calling or if you are talking to a scammer.
Tax Identity Theft Scams: Another tax scam to look out for is tax identity theft. This occurs when a scammer uses your 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. Learn more about tax ID theft scams.
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. (However, should you be the victim of tax ID theft, don’t panic. The IRS will work with you to resolve the concerns impacting your valid tax return).
• Apply for an 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 when filing your tax return. This is a great proactive tool that can keep others from falsely filing a tax return in your name.
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.
• Remember that the IRS does not initiate contact with taxpayers 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. If these methods are used, don’t respond and don’t click on any links.
• Check out websites carefully and make sure you are accessing the real IRS when filing your taxes electronically or inquiring for additional information.
• If you get tax information delivered electronically from your employer or other entity, treat that information carefully. Download it onto a password-protected computer.
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.
Help make others aware by also sharing your experience on BBB Scam Tracker. For more information on tax related topics, please visit BBB’s Tax tips and resources page.
Kelvin Collins is president & CEO of the Better Business Bureau serving the Fall Line Corridor, serving 77 counties in East Alabama, West Georgia, Southwest Georgia, Central Georgia, East Georgia, and Western South Carolina. This tips column is provided through the local BBB and the International Association of Better Business Bureaus (IABBB). The Better Business Bureau sets standards for ethical business behavior, monitors compliance and helps consumers identify trustworthy businesses. Questions or complaints about a specific company or charity should be referred directly to the BBB at Phone: 1-800-763-4222, Web site: BBB.org or E-mail: info@centralgeorgia.bbb.org.
