Sniff Out—and Smack Down—Tax Fraud
Put the kibosh on tax-related identity theft with these quick and easy tips.
Thursday, March 10, 2011
- Got an email from the IRS? It’s probably a fake. The IRS never communicates or requests personal information such as a Social Security number (SSN) or date of birth via unsolicited email. Do not open or forward emails claiming to be from the IRS—only forward them to email@example.com.
- Don’t be a follower. Always type in full URLs and never follow links in emails, download attachments or respond to banner ads for tax services from unknown sources or sources you don’t trust—especially those promising a bigger or faster refund (average refund times don’t change: three weeks for e-filed returns and six weeks for mailed copies). These are probably scams.
- Keep an eye peeled for imposter or “cloned” websites. These usually are typified by grammatical errors, typos and an unprofessional appearance. Watch for odd error messages, unexpected page layouts or other strange site behavior. Visit sites of reputable companies only. Make sure there’s a little yellow padlock to the right of the address bar indicating a secure connection.
- Read the fine print. When filing taxes online, read the privacy and security policy first, especially if the service is free. Find out when personal identifiable information will be destroyed and whether it can be shared with third parties.
WITH AN ACCOUNTANT
- Paranoid is the new black. Store sensitive tax information (worksheets, W-2s, 1099s, 1040s) on a password-protected or encrypted external drive or disk and keep it in a secured location, such as a safe-deposit box or safe. If you must store it on your computer, make sure the drive is encrypted. Never store tax files or any personal information on a cloud or Internet drive.
- Take a sledgehammer to it. Destroy old computers, drives, printers or fax machines containing past tax information, or use a wiping application.
- Employ strong user names and passwords, especially when conducting financial business online. Always include uppercase and lowercase characters, numbers and symbols such as *, ! and &.
- Be picky about your preparer. Many fraud rings front as tax-preparation companies and may offer to review returns for inaccuracies, but they can steal your information and redirect your refund.
- Snoop around. Verify the status of your preparer’s license with the Better Business Bureau and IRS Office of Professional Responsibility (OPR). Email the IRS at firstname.lastname@example.org with the full name of the individual or company and their address.
- Be suspicious. Be wary of services claiming to give zero or extraordinarily low tax liability. They often charge exorbitant fees, skim money from returns or divert refunds.
- Everyone’s a critic. Scrutinize returns carefully and immediately. Never sign a blank or incomplete return or one the preparer has failed to sign (paid preparers are required to sign your return and complete all preparer sections requesting their ID number).
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- Do the math. Your annual Social Security Statement will identify all income from individuals working in the United States under your SSN. Do the numbers look right? This can be a good way to spot otherwise undetected identity theft.
- Stalk your mail carrier. Monitor your mailbox and stay on the lookout for W-2s, 1099s and other official tax forms. If any are late or appear to have been opened, contact the provider immediately to find out how and when they were mailed.
- Splurge on the extras. If you file a return by snail mail, make sure to use certified mail from the U.S. Postal Service so you can confirm its arrival.
- Go electronic. Opt for direct deposit of tax refunds to avoid lost or stolen refund checks.