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FTC: Complaints About Bogus Tax Returns Soar in 2014

Taxpayers have become the number one target of scammers, according to the Federal Trade Commission (FTC), the government agency that compiles reports about identity theft and other fraud made at all levels, from local police to the federal government.

The numbers are stunning — a more than 2,300 percent increase in the number of complaints about calls from fraudsters pretending to be IRS agents. Take a look at the raw numbers: In 2013, the FTC received 2,545 complaints about IRS imposter scams; in 2014 that number skyrocketed to 54,690.

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“We’ve seen an explosion of complaints about callers who claim to be IRS agents but are not,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in a prepared statement. “IRS employees won’t call out of the blue and threaten to have you arrested or demand specific methods of payment.”

Michael Delgado, Assistant Inspector General for Investigations for the Treasury Department's Tax Administration, revealed during a webinar on Tax Identity Theft and IRS Imposter Scams that victims have lost more than $14 million in this scam. The top states in terms of dollar loss:

1. California

2. Florida

3. New York

4. Pennsylvania

5. New Jersey

Meanwhile, tax-related identity theft is the most common form of ID theft in the U.S. In 2014, the FTC received nearly 110,000 complaints about tax identity theft, accounting for almost 33 percent of all complaints about ID theft. The majority of cases involved phony tax returns.

“We remain dedicated to stopping tax-related identity theft and protecting taxpayers, and we are making important progress on that front,” said IRS Commissioner John Koskinen in a separate statement. “Taxpayers still need to be extremely careful and do everything they can to avoid becoming a victim.

How do you protect yourself?

Lisa Schifferle, FTC, said during the webinar that you must “protect what you have and be careful what you share.” Most notably, protect your Social Security card by not carrying it, and don’t share your SSN when requested on forms. First, ask why the number is needed and how it will be protected.

The FTC also recommends these solutions—

Tax ID Theft:

  •  File your taxes as soon as possible. Nearly all tax-related ID theft comes from thieves filing phony tax returns.
  •  If you find out you’re a victim, immediately file a complaint with the FTC, phone the IRS at 1-800-908-4490 and file a report with your local police department or sheriff’s office.

IRS Impersonation Scam:

  •  Hang up. The IRS will never contact you by phone.
  •  Report the scam to the FTC and to the Treasury Inspector General for Tax Administration.

Delgado recommends that “if you get contacted by phone, simply hang up; if you get an email, delete it.” The IRS will contact you by mail.

Webinar presenter Rosa Maymi, of AARP, offered another piece of advice — open all mail immediately. She noted that some people choose to open mail just once a month. “You’re likely to be the first line of defense” in knowing there’s a problem, said Mayami, so open your mail as it arrives.

The statistics cited in this report can be found in the FTC’s Consumer Sentinel database, released Jan. 26, 2014.

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