Fighting Back against Tax Scams

Co-Authored By Eva Velasquez, President/CEO, Identity Theft Resource Center

There are many different ways that identity thieves can get their hands on your money or your data. Some of them require high-tech skillsets like hacking and writing malicious software. Others are less involved and basically amount to tricking you into complying. Unfortunately, even the most low-tech tax scam can cause lasting and expensive damage.

According to the U.S. Treasury Inspector General for Tax Administration, U.S. taxpayers have paid more than $23 million to scammers claiming to be related to the IRS since 2013. Thieves use a variety of methods to reach out to the public, including phone calls, text messages, email and even social media communication. With the ease of “robocalling” and the ability to change the number that appears on one’s caller ID, phone calls may be one of the most popular methods to reach potential victims.

Each year between January and April, the Identity Theft Resource Center (ITRC) sees a significant increase in the number of calls for help with tax identity theft and related crimes. The data from the ITRC’s victim assistance call center shows a steady increase that usually reaches its highest point in April; by the April 15 filing deadline, many taxpayer victims have submitted their returns only to be told that unauthorized parties have already filled in their names.

Online con artists will tempt you to take action in a variety of ways during tax season. ITRC advises to be wary of the following:

  • Phishing scams: Cybercriminals will try to get you to do something, like click on a link or respond to an email, so they can steal your personal information. Watch out for unsolicited emails, texts, social media posts or fake websites that may lure you in and prompt you to share valuable personal and financial data. Armed with this information, online thieves can pilfer funds and/or commit identity theft. And opening malicious links or attachments can cause malware – viruses, spyware and other unwanted software that gets installed on your devices without your consent – to infect your files.
  • IRS imposters: As if that’s not bad enough, throughout the year victims continue to receive calls from scammers claiming to be with the IRS, typically citing issues with their tax returns. These calls often carry a sense of urgency and emotional upheaval, with threats of fines and even imprisonment if immediate payment isn’t made. The most common forms of payment that scammers demand are untraceable methods such as prepaid debit cards, gift cards and wire transfers. In many instances, scammers insist that those are the only payment methods the IRS will accept.
  • Tax preparer fraud: The overwhelming majority of tax preparers provide honest services, but some unscrupulous individuals may target unsuspecting taxpayers and the result can be refund fraud and/or identity theft. The IRS reminds anyone filing a tax return that the preparer must sign it with their preparer tax identification number.

So what can be done to stop the epidemic of tax scams?

The first step is to increase public awareness of the scams and spread the word about how the IRS does and does not operate. Too many victims don’t know know that the IRS does not have the authority to send police officers to arrest them, yet scammers often threaten their victims with arrest. Also, the IRS does not accept store gift cards and iTunes gift cards as payment, but those are common methods that scammers rely on. The IRS will never email or call you demanding payment without having first mailed a bill – nor will they ask for a credit or debit card number via email or phone. Consumers need to go directly to the known source rather than believe that the person calling is really from the IRS. The IRS will never threaten someone who wants to verify that a phone call is really from them. In fact, they would probably say “thank you!” Helping consumers understand that they need to verify the identity of the entity that is calling is critical.

On the retail side of things, there’s a lot that can be done to reduce the number of victims. Signage at gift card kiosks and payment stations that informs consumers of their rights and reminds them that gift cards are not an accepted payment method might make them pause long enough to think it through.

But one of the most important things we can do is alleviate the emotional connection that scammers wield over their victims. According to iDcare of Australia and New Zealand, the emotional trigger and feeling of urgency are directly related to the success of scams. That feeling is logically compounded when the IRS is involved, as there’s a societal perception that the agency is difficult to deal with and “comes after” the taxpayers. Scammers are playing off these notions and convince their victims that taking immediate action will resolve the fake issue and keep it from becoming even more dire.

The important takeaway for consumers is to block the emotional response long enough to think it through. If they take enough time to pause and analyze the phone call, they may come to realize on their own that the government doesn’t trade in iTunes gift cards, or that the caller didn’t provide any accurate information. Spreading the word that the IRS does not engage in these tactics is important in breaking the hold that scammers have over their victims.

The National Cyber Security Alliance has some easy-to-follow tips that will help protect you against fraudster tricks:

  • Keep all machines clean: Having updated software on all devices that connect to the internet is critical – this includes security software, web browsers and operating systems for your PC and mobile devices. Having current software is a strong defense against viruses, malware and other online threats.
  • Lock down your login: Fortify your online accounts by enabling the strongest authentication tools available, such as biometrics, security keys or a unique one-time code through an app on your mobile device. Your usernames and passwords are not enough to protect key accounts like email, banking and social media.
  • When in doubt, throw it out: Links in emails, social media posts and online advertising are often how cybercriminals try to steal your personal information. Even if you know the source, if something looks suspicious, delete it.
  • Think before you act: Be leery of communications that implore you to act immediately – especially if you are told you own money to the IRS and it must be paid promptly.

Additionally, make sure to only use secure sites (look for a lock in the browser and/or https:// in the URL) when filing taxes. And ask if your tax preparation service has checked for malware issues.

Here are a few resources that can help you protect your identity and be safer and more secure online this tax season – and year-round:

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