By Jeffrey R. Wolfe, Senior Vice President and Manager, Wealth Planning Strategies
We continue to move to an online world. The use of apps, online banking, online bill payments, etc.—it all means we have more information “out there” in cyberspace. Where information lies, generally there are scammers looking to steal that information. In the tax world, the IRS continues to publish warnings for taxpayers about the multiple tax scams attempting to gain access to personal information, steal tax refunds or rip off individuals. The IRS publishes the “Dirty Dozen” of tax scams, which you can review here. Some of the prominent techniques garnering attention are:
- Phishing & Smishing: The IRS warns that especially during tax season scammers target people with realistic-looking emails (“phishing”) and texts (“smishing”) about tax returns and refunds. The texts often contain links to phony IRS websites. Specifically, spear phishing/smishing is on the rise, which is a trick using the IRS logo and a variety of subject lines such as “Action Required: Your account has now been put on hold.” The IRS has observed similar bogus communications that claim to be from a “tax preparation application provider.” One such variation offers an “unusual activity report” and a solution link for the recipient to restore their account. Tax preparers are also becoming targets, with scammers trying to pose as new clients so they can hack into the tax preparer’s system to gain client data.
These scams attempt to gather your private information or maybe even to file a false return to gain your refund. The IRS specifically states that it will NEVER initiate contact with a taxpayer regarding a tax bill or refund via text or email. If you use a tax preparer, ask them about their security procedures to protect your information. Remember, if you receive unsolicited digital contact, its likely a scam. Don’t click on unknown links, and review the email address to make sure it’s accurate.
- “Helpful” Scammers: To help taxpayers, the IRS has made opening your online account very simple by going to Online Account at IRS.gov. In that account you can gather some of your individual tax information, and in some simpler cases, file your tax return for free. Because this area has valuable information, scammers are trying to gain access to these accounts. The typical scam is a third party offering “help” to create your online account. In doing so they gain access to your name, social security number, photo identification, etc. Sometimes these scammers will even charge a fee for their “help.”
The IRS reminds taxpayers that the only place to create an online account is at the IRS.gov website. Moreover, the Service stresses that there should be no need to seek third-party assistance as the process is simple, and it reminds us that the IRS will never ask for payment to open these accounts.
The IRS is asking for your help to stop these scammers. It asks that if you receive a suspected fraudulent message that you, the taxpayer, should take a screenshot of the message and include the screenshot in an email to phishing@irs.gov with the following information:
• Date/time/time zone in which the message was received
• Phone number that received the text message
For other fraudulent concerns, the IRS asks that you report an abusive tax scheme using the online Form 14242 – Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed Form 14242 PDF and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.
The IRS also offers suggestions and resources to help you as well. It recommends the following precautionary steps:
• Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure. Treat your personal information like you do your cash; don’t leave it lying around.
• Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and can automatically update. Encrypt sensitive files such as tax records you store on your computer. Use strong and varied passwords, and make sure your tax preparer has similar protections.
There are recommended links to review as well. To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together.
If you are getting a refund, make sure you get it! Remain diligent when managing your tax preparations, and if something seems “phishy” from the IRS, trust your instincts and question what’s going on to help avoid being scammed.
IMPORTANT DISCLOSURES: The information provided is based on internal and external sources that are considered reliable; however, the accuracy of this information is not guaranteed. This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.