Avoiding the Pitfalls of Tax Scams

February 16, 2016

relatedW2’s and year-end tax information forms have arrived and the tax season is now well underway. As you begin to gather your information to file your taxes, it’s important to remain cautious and vigilant in order to protect yourself from the countless scams and tricks criminals are employing to acquire your identity or assets illegally. The best way of avoiding the pitfalls of tax scams and becoming a victim is to:

Learn about current threats

Knowledge is power and the Internal Revenue Service (IRS) makes staying up-to-date on current tax scams easy. Their website and social media channels contain information about the methods criminals are using to collect financial information and best practices to avoid falling victim. Common scams involve trying to emulate legitimate organizations, such as the IRS, by phone, email or phony websites in an attempt to lure people into sharing passwords, credit card numbers or other personally identifying information.

Protect your information online

While a new partnership between the IRS, states and the tax preparation industry has tightened online tax protocol to help combat identity and tax theft, it is imperative that you also take the initiative to implement security features to help protect your online identity. We suggest that you:

  • Keep computer programs and operating systems updated with the most recent security patches and utilize anti-virus protection software, firewalls and spyware blockers. When in doubt, enlist the help of a trusted computer professional.
  • Never respond to emails or phone calls indicating that you must provide your social security number, account number or any other details over the phone unless you have initiated the call and know that the business that you are dealing with is reputable.
  • Change your online passwords regularly, don’t share them or write them down and avoid using automatic login features that save login and password information.
  • Check your account activity regularly to ensure there are no unauthorized transactions. Report any discrepancies to your financial institution immediately.
  • When conducting an online transaction, check your browser to verify a secure connection. If the web address starts with “https”, and you see the lock symbol in the browser bar, you have a secure connection.
  • Never use public computers, Wi-Fi or hotspots to conduct financial or online transactions.

 Recognize methods the IRS uses to contact taxpayers

The IRS is very direct about the methods of communication that it uses to contact taxpayers. Often the first contact on behalf of the IRS to taxpayers is initiated by mail. Subsequent contact may be followed-up with a phone call. However, the IRS and their private collection agencies will not call demanding payment immediately or act in a threatening manner. According to the IRS website, it “doesn’t initiate contact with taxpayers by email, text messages, or social media channels 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 you are contacted by the IRS in a manner that appears to be suspicious, you should contact the IRS or consult their website. The IRS offers current information on Fraud, Identity Theft & Phishing on its website through its Help & Resources tab.