Tax identity theft is a growing concern. In 2018, tax fraud ranked second for the most frequent type of identity theft — only behind credit card fraud. The IRS is always working to improve security and minimize tax identity theft cases. Last holiday season, the IRS warned taxpayers that the increase in shoppers makes December a shopping season for identity thieves too.
Identity thefts use a variety of tactics and schemes to steal your money. For instance, one method is to use stolen credit card information, social security numbers, and other personal information to file a fraudulent tax return and steal your refund.
In this article, we’ll take a look at popular tax scams, how the IRS is improving tax identity security, and steps you can take this holiday season to protect yourself from tax identity theft.
Common Phishing Scams From the 2018 Holiday Season
According to the IRS, phishing scams were up 60% percent in 2018. These scammers sought to steal money and personal information through deceptive emails and phone calls. Usernames, passwords, and account information can all help a scammer steal your money — or worse, your identity. Here are a few of the top scams we saw last year.
Email Scams: How Do They Work?
Scammers using email will use email addresses similar to the real ones with logos and other stylistic headings that imitate the legitimate sites. With these look-alike emails, they will try to convince you to:
- Download an attachment containing malware
- Provide payments in an “IRS Important Message” or “IRS Taxpayer Notice” email
- Enter your sign-in information on a fake site
Phone Scams Focus on Tax Debts and Payments
Similarly, phone scammers pretend to by IRS representatives and include various threats if they don’t receive immediate payment for supposed tax debts. They might insist that you:
- Pay an existing balance with a pre-loaded card
- Make an immediate wire transfer to an account
- Provide personal, financial, and tax information so that they can “look into” your options for you
The IRS Is Working to Improve Communication and Identity Verification
“Taxes. Security. Together.” Security Summit Partnership
The Security Summit partnership consists of the IRS, state organizations, and tax professionals and is aimed at identifying and stopping fraudulent tax activity. Their “Taxes. Security. Together.” campaign encourages better communication between government and private organizations throughout the country. The campaign also raises awareness for specific tax security issues and communicates current tax schemes to taxpayers.
Recent Identity Verification Update for IRS Payment Plans
In 2019, the IRS added a crucial security step for taxpayers looking to view or edit their IRS payment plans and accounts. Now, in addition to other required login and set information, taxpayers will need to verify either a financial account or a cell phone number registered to their name. We’ll have to wait and see if this step makes much of an impact on the number of fraudulent sign-ins and payment plan access.
Tips for Protecting Your Identity and Tax Refunds This Holiday Season
At the store
- Use a credit card rather than a debit card for more control over your charges.
- Keep an eye on your purse or wallet — pickpockets are everywhere over the holidays.
- Don’t carry your checkbook or social security number with you — or any other personal documents if possible.
- Only use bank-affiliated ATMs and always block your pin from view as you’re typing it in.
- Only buy from familiar stores that you know and trust.
- Check that the website is secure and legitimate before entering any financial information or other sensitive data.
- Don’t make purchases while connected to hotspots or other unsecured wireless networks.
- Keep your computer and other electronic devices up to date with security software.
- Use long, nonsensical, and unique passwords to protect all your sensitive accounts (banks, online stores, email, etc.).
At Home and on the Go
- Store personal information (social security, birth certificate, account numbers, etc.) in a lockbox.
- Shred sensitive documents rather than throwing them away where they could get stolen.
- Do not provide financial information over the phone to charities or any other organization looking for money.
S.H. Block Tax Services: Our Tax Experts Are Here to Help
Worried about the safety of your tax identity or documents this holiday season? If you have any questions or concerns about tax identity theft, please contact the tax professionals at S.H. Block Tax Services today by calling (410) 872-8376 or filling out this brief online form.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.