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ID Theft Resources

5 IRS Scams to Watch Out For This Tax Season

Written by Steve Weisman for NortonLifeLock

Tax season could mean hunting season for scam artists. Here are some of the new and old tax scams you should watch for this tax season.

1. Income-tax identity theft

How it works:

Income-tax identity theft occurs when an identity thief electronically files an income tax return using your Social Security number and a counterfeit W-2 in an attempt to get an often-inflated income tax refund. It’s worth noting that if the identity thief has gotten their hands on your real W2, they can also use that to file the tax return and claim your real refund.

How to protect yourself:

Here are two of the best things you can do to help protect yourself against becoming a victim of income tax identity theft. Protect your Social Security number and file your income tax return early.

Income tax identity thieves can only obtain a fraudulent refund using your Social Security number if they manage to file a return using your SSN before you do.

How to report income-tax identity theft:

You should file a Form 14039 — the Identity Theft Affidavit — with the IRS electronically. Form 14039 can be used to report various types of identity theft, including income-tax identity theft. You can obtain the form at www.identitytheft.gov. You should receive a confirmation of receipt of the form from the IRS within 30 days.

File a police report immediately.

If you discover that someone has filed a fraudulent tax return using your information, that likely means that someone is using your Social Security number. Because of this, you may want to consider placing a freeze on your credit files at the three major credit reporting agencies, Equifax, Experian, and TransUnion, so fraudsters cannot open new lines of credit with your personal information.

2. Phishing emails and text messages

How it works:

Phishing emails, the more-targeted spear-phishing emails, and text messages are the basis for a wide variety of scams.

For instance, a phishing email or text message might appear to come from the IRS and try to lure you into clicking on a link that could install malicious software — malware, for short — that could steal your personal information from your computer, smartphone or tablet.

Other phishing emails and text messages might try to lure you into directly providing the identity thief with your personal information, such as your Social Security number. The identity thief might then use that information to file a fraudulent tax return in your name.

Spear-phishing emails and text messages can be more dangerous than regular phishing emails or text messages. Why? Because spear-phishing emails may contain your name or other personal information that makes the email or text message more likely to appear legitimate.

How to protect yourself:

In everyday life, it can be hard to tell who is actually sending you the email or text message. But there’s easy way to know if it is the IRS sending you an email or text message.

If you get an email or a text message that appears to come from the IRS, it’s a scam. The IRS never initiates communications with taxpayers by email or text messages. Ignore it.

How to report it:

Report phishing emails and text message to the IRS at phishing@irs.gov

3. IRS impersonation phone call

How it works:

Scammers call potential victims and pose as IRS agents. They might demand immediate payment of overdue taxes through a wire transfer or gift cards. They may threaten arrest if the payments are not made immediately.

How to protect yourself:

The IRS will never call you demanding an immediate payment. The IRS never demands payment by wire transfer and does not accept gift cards under any circumstances.

How to report it:

Report IRS impersonation phone calls to the IRS at phishing@irs.com and write in the subject line “IRS Phone Scam.”

4. Refund overpayment scam

How it works:

This is one of the newer and more sophisticated scams, involving several steps. In this case, identity thieves send phishing emails to tax preparers to gain information about the tax returns of their clients.

The identity thieves then file income tax returns on behalf of those clients using much of the same information contained in previous tax returns — for instance, information about dependents. By including such information, identity thieves make the fraudulent tax returns less likely to be detected by the IRS.

The scammers then request the IRS to send the inflated fraudulent refund to the actual bank account of the targeted victim, so nothing appears unusual. Here’s what happens next.

After the refund has been sent to the victim’s bank account, the victim receives a phone call from the scammer posing as an IRS agent. The scammer tells the victim there was an error in the refund amount and that it must be wired back to the IRS.

The call might seem legitimate for a few reasons. First, the victim’s caller ID indicates the call is from the IRS. Second, the caller knows the victim’s Social Security number and the exact amount that was sent by the IRS to his or her bank account. The victim might then wire the money not to the IRS, but to the identity thief.

How to protect yourself:

Scammers can manipulate your caller ID through a technique called spoofing. That makes it easy for a scammer to make a call that appears to come from the IRS.

As a general rule, you shouldn’t depend on your caller ID to be accurate. Never give personal information or make a payment in response to a telephone call without confirming that the call is legitimate.

Here’s another rule. The IRS never calls taxpayers on the phone demanding repayment of refunds issued in error and they never demand that payments be wired. If you do receive such a call, you can be sure it’s a scam.

How to report it:

If you receive a fraudulent refund check sent to your bank account, you should contact the Automated Clearing House department of your bank and tell them to return the funds to the IRS. Next, call the IRS at 1-800-829-1040 to let them know what happened. Tell them you’re returning the direct deposit payment made to your account.

5. Electronic filing hacking

How it works:

Filing your income tax return electronically can be safe and convenient if done properly. But income tax identity thieves might get there first. They may hack your computer to steal your personal information, or gain access to the online account you are using to electronically file your return. They may file a fraudulent income tax return before you’ve completed and filed your own return.

How to protect yourself:

Here are some steps you can take to help protect against electronic hacking.

  • Use a unique, complex password and two-factor authentication when filing your taxes electronically.
  • Install security software on your computer. Update the software with the latest security patches as soon as they become available.
  • Don’t file your income tax return using public Wi-Fi.
  • Don’t store your tax documents, such as your W-2s, 1099s, past tax returns and other files containing sensitive personal information on your computer. Consider storing these files on a separate USB portable hard drive.
  • Beware of phishing emails that appear to come from the company you are using to file your taxes. The phishing emails may ask you to confirm your account information and password. Never provide that information in response.

How to report it:

You should file a Form 14039 electronically with the IRS to report if your electronic tax filing has been compromised. You can find the form at www.identitytheft.gov. Also, file a police report as soon as possible.

Signs that could indicate you’re a victim of a tax-related scam

Often the first sign you’ve become a victim of income tax identity theft is when the IRS notifies you that an income tax return has already been filed using your Social Security number.

Other signs may include:

  • You receive a tax refund even though you haven’t yet filed your return.
  • The IRS rejects your tax return when you file it. The reason: A fraudster has already filed a tax return in your name.
  • The IRS sends you a letter asking whether you submitted a tax return using your name and Social Security number. In this case, the IRS may have flagged a suspicious return and is trying to confirm whether it’s fraudulent or not.

What to do if you’re a victim of a tax-related scam

If you lost money as a result of a tax scam, report it to the Treasury Inspector General Administration and file a complaint with the Federal Trade Commission through their complaint assistant.

You also can obtain an Identity Protection PIN — also know as an IPIN — from the IRS. It’s a six-digit number the IRS assigns to you for filing future income tax returns.

Even if don’t become a victim of income tax identity theft or a related tax scam, it’s a good idea to report suspected scams to the IRS. The agency uses such information to educate taxpayers and aid law enforcement.

Your taxes could be getting filed in your name by someone else.

LifeLock identity theft protection sees more threats to your identity, like your personal info on the dark web. And if you become a victim of identity theft, dedicated Identity Restoration Agents will work to fix it.

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Editorial note: Our articles provide educational information for you. Norton LifeLock offerings may not cover or protect against every type of crime, fraud, or threat we write about. Our goal is to increase awareness about cyber safety. Please review complete Terms during enrollment or setup. Remember that no one can prevent all identity theft or cybercrime, and that LifeLock does not monitor all transactions at all businesses.

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