Stay safe online this tax season
February 19, 2016
Tax season and scam season
As tax season is underway, scammers are out in full force, trying to steal your tax refund. According to the IRS, more than 360,000 individuals have been targeted by tax scammers since 2013. TurboTax, a premier tax filing program, recently received backlash when several states refused to accept filing from the company amidst potential tax scam issues. TurboTax had to briefly halt filing state tax all together, but started functioning again the next day after reviewing and enhancing the company’s security measures.
It’s clear that tax identity theft is a growing problem. But how do scammers get your personal information, and what can you do to help prevent this?
How the scam works
The goal of tax identity theft is for the cybercriminal to intercept your tax refund directly to their account. There are several ways scammers can get ahold of your money.
- Scammers will call the taxpayer pretending to be the IRS. They’ll state the taxpayer owes taxes and must pay immediately or face jail time, deportation, loss of business, revoked driver’s license, etc. They usually ask for payment via credit card, prepaid debit card, or wire transfer. Although your tax refund isn’t compromised, the scammers still walk away with a large sum of money.
- Sometimes it’s not a phone call but an email. Phishing is when cybercriminals send you an email with links that when clicked provide access to your sensitive information.
- Another technique is hacking into your tax preparation service account directly. If your password is weak or the same as other accounts, the hacker can figure out your login information.
- Once scammers have your information (name, address, social security number, date of birth), they can file a return in your name before you have time to notice. This is done early in the season before the real taxpayers have a chance to file their own tax return.
Ways to prevent tax identity theft
Luckily, there are several steps you can take to help ensure you’re not a victim of tax identity theft.
- File your taxes early. Most scammers will try to file before you get a chance to. You don’t know you’re a victim until you sign into your tax preparation account to see that someone else has already filed taxes under your name.
- Use multi-factor authentication for your accounts. Whether this is your tax preparation account or your email, it’s important to add an extra step of security. Also, be sure to have strong passwords and never use the same password for multiple accounts.
- Delete anything that looks suspicious. Don’t click on any link you suspect is phishing and be sure to forward suspicious emails to firstname.lastname@example.org.
- Don’t give your information out over the phone, email, text, social media, etc. The IRS never asks for payment by credit card, wire transfer, or debit card. In the event that you do owe money to the IRS, they will first send notice in the mail, never over the phone or online.
- Make sure you type IRS.gov into the address bar. Scammers will direct you to other sites pretending to be the IRS or tax preparation service. So, never click a link in an email and double check you’re on the official site. Also, look for “https” at the beginning of the URL.
- Prepare your tax return over a secure wireless network or mail it in. Be sure to shred any copies of your tax return documents that you no longer need.
It’s also a good idea to monitor your credit and make sure no other accounts have been opened in your name. Matt Davis, a spokesperson for the Identity Theft Resource Center told U.S. News & World Report, “If you’ve been a victim of tax fraud, you need to check your credit reports. It’s also a good idea to get a pre-emptive police report, and put alerts on all your accounts. Notifying law enforcement at the outset goes a long way to establishing your credibility with anyone you’re going to have dispute the fallout of the fraud with.”
It’s important to be extra vigilant and monitor your accounts and taxes. If you do come across a scam, be sure to report it to The Internet Crime Complaint Center (IC3) and The Federal Trade Commission’s (FTC) Consumer Sentinel Network.