7 Tips to Help You Spot and Avoid Tax Scams

Update: On March 18, 2020, the U.S. Department of the Treasury and the Internal Revenue Service issued Notice 2020-17 providing relief under section 7508A(a) of the Code,which postponed the due date for certain Federal income tax payments from April 15, 2020 until July 15, 2020. When you do file, make sure you’re taking steps to do it safely.

As the deadline to file your taxes draws closer, a word to the wise: scammers are up to their old tricks and they’re finding new ways to rip off victims.

As phishing scams continue to become more prevalent, fraudsters have been able to access a wealth of personal information about their targets - not just their passwords, email addresses and phone numbers but also other valuable personal financial information to help them carry out identity fraud and file phony tax forms. And they’re making use of stolen personal information to pretend that they are legitimate taxpayers and then defrauding the Internal Revenue Service.

And don’t be lulled into believing this is beyond their reach. Given the frequency of big data breaches - since 2010, data breaches have exposed more than 38 billion records, according to a report published by cybersecurity firm Risk Based Security - this sort of coveted information often winds up on the internet or the dark web to anyone willing to pay for it, allowing criminals to pursue their nefarious activities.  

This can play out in different ways once scammers are able to hijack someone’s identity. Security researchers have seen cases where fraudsters tweak the number of deductions someone claims in order to increase the amount of a tax refund. Also, a fraudster can change the preferred payment mode that a taxpayer has used for years to receive refunds via a prepaid cash card, which essentially serves the same purpose as a routing number and bank account number.

To its credit, the IRS has taken measures to crack down on cyber abuse. Unfortunately, fraudsters continue to develop new ways to stay a step ahead of law enforcement and so, the burden still falls on the public to guard against complacency.

1. Bad Guys are Getting Good at This

Scammers deploy a variety of fear tactics to impersonate IRS officials and scare victims into doing the wrong thing. Criminals increasingly use threats to intimidate and bully people into paying phony tax bills. But know that the IRS will never contact you by phone, email or text messages. The government is never going to send an agent to your home to make you pay back taxes.   

The IRS will usually first mail a bill to any taxpayer who owes taxes. But recognizing the IRS’s official protocols, the bad guys have started to shift their tactics. They now tell victims that, yes, the government never calls taxpayers but, in this case, they’re making an exception due to the severity of the case. And they use the same messaging as the government to the point where many targets wrongly conclude it’s a legitimate call and fall victim. When in doubt, call the real IRS at 1-800-829-1040. Then report the incident to the U.S. Treasury Department at 1-800-366-4484.

All this may sound daunting. But while fraudsters remain relentless, there are still common-sense measures you can take to help mitigate the risks. Let’s start with the easy stuff.

2. File as Early as Possible

This is admittedly hard for a lot of us but the longer you dawdle, the more opportunities you could leave open to scammers. The sooner you file your taxes, the harder it will be for criminals to file taxes using your personal information to claim a refund, which a thief can do with only your date of birth and Social Security Number. If you want some extra protection this tax season, consider contacting the IRS to see if you’re eligible for an Identity Protection PIN. It’s a six-digit code that is assigned to you by the IRS to help prevent misuse of your SSN on fraudulent federal income tax returns.

3. Don’t Rely on Public Wi-Fi

As much as security professionals rail against using public Wi-Fi, the practice continues unabated by many consumers. This could expose you to different kinds of attacks where attackers can read transmitted data or lure users to visit fake versions of popular web pages, allowing them to inject malware onto victim’s devices. Hence, the importance of installing and using virtual private network (VPN) every time you connect to Wi-Fi.  This goes for vetting our tax professionals, as well. If you’re using a secure internet connection on an encrypted VPN at home, you ought to be in good shape. Feel free to get that double espresso you’ve been pining for but don’t make it easy for cyber thieves by connecting to the public Wi-Fi while you’re there. Filing your taxes from the local coffee shop could be an invitation to trouble. 

4. Question Your Tax Preparer

If you use a tax professional, it’s perfectly acceptable to ask whether they’re taking care of security basics. You’re handing over a lot of personal information, so you ought to feel confident asking about their filing system and security procedures. Do they deploy a service that allows for the encrypted and secure transfer of electronic information? How do they store your information and is it stored properly? And most importantly, how are they submitting your filing? Do they use a reputable VPN provider or are they only relying on the security of their ISP?

5. Your Tax Dollars at Work

The IRS recently launched an online resource called Identity Theft Central to improve access to information about identity theft and data security protection. The site, which caters to taxpayers, tax professionals and businesses, includes a wealth of valuable information and tips on how to help protect against tax-related ID theft, phishing, and online scammers.

6. Tell-Tale Signs it’s a Con

As noted earlier, the IRS is never going to send you an email. But one easy giveaway that an email may be fake is when it addresses you as “sir”, “madam”, or “taxpayer.” A second point to note – and this holds true for the rest of the year, not just tax season - never click on any links or open any attachments, especially those claiming to be from the IRS, “Income Tax Department”, or your tax preparation company. If you do receive a letter in the mail and you’re unsure whether it’s legitimate, use the IRS lookup tool to find your letter: https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter.    

7. Use Identity Theft Protection

Enrolling in identity theft protection services may not detect tax fraud but it can trigger alarm bells if a fraudster opens a new line of credit in your name or other changes to your credit. At that point, you’ll be able to respond promptly to take the necessary steps to lock things down. There are so many threats in today's connected world and it can take just one weak link for identity thieves to get in. LifeLock Identity Theft Protection and Norton Security can help protect you against threats to your identity and your devices that you can't easily see or fix on your own. And if there’s a problem, one of our U.S-Based Identity Restoration Specialists will work on your behalf to fix it.

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7 tips to help you file your taxes online safely

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