Tax season is now upon us, and more than ever, we are opting for the convenience of filing taxes online (81% of us did in 2012). While filing online may be faster and more convenient, there is also some risk that you need to be aware of. During 2012, the IRS discovered $20 billion of fraudulent refunds, including those related to identity theft, compared with $14 billion in 2011.*
Hackers have developed sophisticated methods to gain access to your financial information, and they are targeting consumer and small to medium sized business owners. Consumers and small businesses are the low-hanging fruit—the path of least resistance—because they don’t usually have as much security in place as larger companies.
The number of daily targeted attacks specifically aimed at small and midsize businesses more than doubled in the first six months of 2012. One of the best ways to help protect yourself is to be aware of these tax time scams. Some of these are:
- Phishing scams: Unsolicited emails that appear to be from the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS) asking for personal information or stating you are being audited, are not to be trusted. The IRS does not contact taxpayers by email or social media tools. You should report this by sending the email to email@example.com . You may also see phishing scams from online tax companies like the recent TurboTax scam.
- Fake IRS agents: Beware of scammers posing as IRS agents. They contact you via phone or email, and are often prepared with a few personal details (most likely garnered from your trash or social media sites), which they use to convince you of their IRS affiliation. If you are suspicious, check the IRS phishing page at IRS.gov/phishing to determine if it is a legitimate IRS notice or letter.
- Rogue tax preparers. Be careful who you use if you have someone prepare your tax return for you. Some of these return preparers have been known to skim off some of your refund or charge inflated fees for getting you a larger return. Make sure you use a reputable service if you are not doing your own taxes.
Here’s some additional tips that you should follow to protect yourself when filing online:
- Protect your data. This means that all sensitive documents, including anything that includes tax or investment records, credit, debit or bank account numbers, or a Social Security number, must be secured from the moment they arrive in your mailbox.
- Shred non-essential paperwork. Check with your accountant to determine what you need and what you don’t. Use a cross-cut shredder to destroy unneeded documents.
- Go paperless. Whenever possible, opt to receive electronic statements in your inbox. The less paper in your life, the better.
- File early. The earlier you file, the more quickly you will thwart any criminal’s attempt to file on your behalf and collect your refund.
- Use a clean PC. Make sure you are not using a computer that is infected or does not have any security software. You should also make sure that the computer’s operating system and browser are updated and that you use up-to-date, comprehensive security software like McAfee All Access that protects all your devices.
You can also watch this video from the IRS.gov