For everyone that is on top of their game, you have probably already started turning in your tax returns. Tax season is officially in full swing and majority of people are excited about their tax return (unless you owe big time). Not so fast, tax season also means its fraud season! A time when tens of millions of people become more susceptible to having their personal information stolen and scammed out of money.
This year the risk will be even higher due to the one of the largest data breaches we witnessed in September of 2017: The Equifax hack.
"That's exactly the kind of data that the criminals use to commit tax refund fraud and other kinds of tax scams," said Avivah Litan, a cybersecurity analyst at Gartner.
The most common scam seen around tax season is when someone files a refund in your name. And if they don't already have your personal information, criminals often try to get it through email or phone scams... pretending to be the IRS. "Like telling you to come to their site to get the refund or telling you that you're being fined, or under investigation," said Litan.
The IRS has been warning taxpayers about such scams for years. From October 2013 to January 2017, over 10,000 victims collectively paid over $54 million as a result of phone scams last year!
"Don't be fooled by surprise phone calls from criminals impersonating IRS agents with threats or promises of a big refund if you provide them with your private information," then– IRS Commissioner John Koskinen warned at the time. And if you do get a call from someone pretending to be an IRS agent, you should just hang up. "If you're surprised to get a call from the IRS, it almost certainly isn't the real IRS. We generally initially contact taxpayers by mail."
The IRS is taking extreme measures to prevent taxpayers from being hit with scams. The IRS is trying to eliminate fraud by delaying refunds for those claiming the Earned Income Tax Credit or the Additional Child tax credit, stated Nathan Rigney, a tax research analyst at H&R Block. "Because those credits are target-rich for tax identity thieves, this allows the IRS to match the information on those returns to W-2s," he explained.
The earliest those frauds will be issued this year is mid-february, according to the IRS. "The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2018, if they chose direct deposit and there are no other issues with the tax return," the agency said earlier this month.
Here are some tips to help you avoid tax return fraud:
If you end up being a victim to tax return fraud, you can get your money back IF you are persistent. "If a fraudulent return was filed, the valid taxpayer is still entitled to their return," says Rick Henderson, principle at Atlanta Financial Associates. "However, they will need to file the proper return using paper filling and also they would have to provide ID and proof that they are the valid filler, so there will be requirements for additional documentation and identification. The process may take up to 6 months to get any refund due in that situation."
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