It’s the most vulnerable time of the year. Tax time is when cyber criminals pull out their best scams and manage to swindle consumers — smart consumers — out of millions of dollars.
According to the Internal Revenue Service (IRS), crooks are getting creative and putting new twists on old scams using email, phishing and malware, threatening phone calls, and various forms of identity theft to gain access to your hard earned tax refund.
While some of these scams are harder to spot than others, almost all of them can be avoided by understanding the covert routes crooks take to access your family’s data and financial accounts.
According to the IRS, the con games around tax time regularly change. Here are just a few of the recent scams to be aware of:
According to the IRS, schemes are getting more sophisticated. By stealing client data from legitimate tax professionals or buying social security numbers on the black market, a criminal can file a fraudulent tax return. Once the IRS deposits the tax refund into the taxpayer’s account, crooks then use various tactics (phone or email requests) to reclaim the refund from the taxpayer. Multiple versions of this sophisticated scam continue to evolve. If you see suspicious funds in your account or receive a refund check you know is not yours, alert your tax preparer, your bank, and the IRS. To return erroneous refunds, take these steps outlined by the IRS.
If someone calls you claiming to be from the IRS demanding a past due payment in the form of a wire transfer or money order, hang up. Imposters have been known to get aggressive and will even threaten to deport, arrest, or revoke your license if you do not pay the alleged outstanding tax bill.
In a similar scam, thieves call potential victims posing as IRS representatives and tell potential victims that two certified letters were previously sent and returned as undeliverable. The callers then threaten to arrest if a payment the victim does not immediately pay through a prepaid debit card. The scammer also tells the victim that the purchase of the card is linked to the Electronic Federal Tax Payment System (EFTPS) system.
Note: The IRS will never initiate an official tax dispute via phone. If you receive such a call, hang up and report the call to the IRS at 1-800-829-1040.
Baiting you with fear, scammers may also leave urgent “callback” requests through prerecorded phone robot or robo calls, or through a phishing email. Bogus IRS robo often politely ask taxpayers to verify their identity over the phone. These robo calls will even alter caller ID numbers to make it look as if the IRS or another official agency is calling.
Be on the lookout for emails with links to websites that ask for your personal information. According to the IRS, thieves now send very authentic-looking messages from credible-looking addresses. These emails coax victims into sharing sensitive information or contain links that contain malware that collects data.
To protect yourself stay alert and be wary of any emails from financial groups or government agencies Don’t share any information online, via email, phone or by text. Don’t click on random links sent to you via email. Once that information is shared anywhere, a crook can steal your identity and use it in different scams.
Human resource/data breaches
In one particular scam crooks target human resource departments. In this scenario, a thief sends an email from a fake organization executive. The email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their Forms W-2. This scam is sometimes referred to as business email compromise (BEC) or business email spoofing (BES).
Using the collected data criminals then attempt to file fraudulent tax returns to claim refunds. Or, they may sell the data on the Internet’s black market sites to others who file fraudulent tax returns or use the names and Social Security Numbers to commit other identity theft related crimes. While you can’t personally avoid this scam, be sure to inquire about your firm’s security practices and try to file your tax return early every year to beat any potentially false filing. Businesses/payroll service providers should file a complaint with the FBI’s Internet Crime Complaint Center (IC3).
As a reminder, the IRS will never:
- Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you several bills.
- Call or email you to verify your identity by asking for personal and financial information.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- Require you to use a specific payment method for your taxes, such as a prepaid debit card.
- Ask for credit or debit card numbers over the phone or e-mail.
- Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
If you are the victim identity, theft be sure to take the proper reporting steps. If you receive any unsolicited emails claiming to be from the IRS to email@example.com (and then delete the emails).
This post is part II of our series on keeping your family safe during tax time. To read more about helping your teen file his or her first tax return, here’s Part I.