Identity theft is the fraudulent acquisition and use of a person’s private identifying information, usually for financial gain. Identity theft for purposes of filing fraudulent tax returns has been occurring for many years. According to Forbes, as of March 5, 2016, the IRS had identified 42,148 tax returns with $227 million claimed in fraudulent refunds. The IRS is working on methods to detect fraudulent returns before being processed. This coming tax season IRS has already warned that returns with Earned Income Credit and Additional Child Tax Credit will be held for additional scrutiny until February 15th. This will allow IRS to compare early filed returns with reported W-2s and 1099s.
What can you do? Protect your SSN. Most of the reasons to provide your SSN to anyone would be to open bank accounts, apply for credit cards/loans, file tax returns, fill out W-4s and I-9s for employment, and fill out W-9s as a subcontractor. Others may ask for it, but be sure to find out why they need it. Many doctors’ offices ask for it in their paperwork, but find out why they need it. I only provide them with the last four digits of my SSN.
There are many phishing scams trying to obtain your sensitive information. The current ones to watch out for according to the IRS are:
1. Fake emails purporting to contain an IRS tax bill related to the Affordable Care Act. IRS does not email notices to you.
2. IRS impersonation calling demanding payment for back owed taxes and wanting payment. IRS would have sent you many notices before any call would be made to you and would not ask for payment over the phone or for you to obtain prepaid cards.
3. Fake emails citing tax fraud and trying to trick victims into verifying the last four digits of their SSN by clicking on the link provided.
4. IRS impersonation call saying they have your tax return and just need to verify a few details to process your return. The scam tries to get you to give up personal information such as SSN or personal financial information, such as bank numbers or credit cards.
5. Fake email phishing scheme to payroll and human resource professionals that purports to be from a company executives and requests personal information on employees.
Of course, scams evolve all the time and you should be leery of anyone asking you for sensitive information or money. The best thing to do is take down their name and number and ask us about it. You can also call the IRS directly at 1-800-829-1040.
By Traci A. Malik, CPA/CFF CFE MAcc
Opinions are those of Traci Malik and not necessarily those of Raymond James. Raymond James is not affiliated with and does not endorse the opinions of Traci Malik.