Tax Scams That Could Try To Steal Your Refund

Tax Scams That Could Try To Steal Your Refund

One of the most popular new scams on the market involves fraudsters making false statements in hopes of getting a relatively low tax refund. They no longer try to steal thousands of dollars by taking advantage of generous tax credits.

At least in the past two years, scammers are trying to make low-cost refund claims, hoping that these small numbers would encounter little or no scrutiny when processed by the tax authorities.

Tax scams focus on the use of stolen credentials and are generally managed by large criminal companies with an elaborate system. One group can steal social security numbers and identifying information, while another group is in charge of creating legitimate but false tax returns. And then, another group will study ways to channel the stolen money into the tax refund.

The Internal Revenue Service estimates that it paid at least $110 million in fraud with the identity theft tax refund in 2017 and at least $1.6 billion in fraud with the tax refund identity theft in 2016, according to a study by the United States Government Accountability Office last year. The IRS said that the complaint data and better schematic information lead to better filters for detecting allegations of identity theft.

A security summit, an unprecedented partnership between the IRS, state tax agencies, and the private sector tax sector, met in 2015 to form a coordinated front against these tax scams.

Why Criminals Like Small Tax Refunds

What is the purpose of fraudulent refunds of several hundred dollars for criminals?

If a tax refund is small enough to go unnoticed, criminals can try to make similar profits over the next few years to build a history and make those returns even more legitimate. They can steal money for a few consecutive years.

They could use stolen credentials for someone whose income is so low that they don't even have to file an income tax return. Therefore, detecting fraud may take longer.

These scammers ensure that they continue to evolve and seeks new opportunities to scam unsuspecting victims.

Why a Tax Preparer is also a Target

When it comes to tax scams, consumers are not the only targets. This year, scammers are focusing more and more on tax professionals.

Tax professionals are once again warned to avoid phishing scams that thieves often use to gain control of their computers. And they must intensify the use of multi-factor authentication through the use of tax software.

Thieves can pretend to be a potential customer, a cloud storage provider, a tax software provider, or even the IRS in their efforts to entice tax professionals to download attachments or open links.

We must all be alert to so-called urgent messages, especially those that assume some problems require immediate action.

Tax identity theft is a constant threat

The Internal Revenue Service can reject a return made through e-filing because of a simple mathematical error or a typing error, which can be easily repaired. You will receive an explanation of why the system rejected the return.

But it is also possible that the IRS system refused your statement because a scammer has already filed another report with your ID.

If your return by email is refused due to a duplicate reference with your social security number, you must complete the IRS 14039 legal identity theft declaration form. You must use a form on, print it, then attach it to the paper tax return, then submit it as shown.

To protect yourself from these tax scammers, the FTC and other watchdogs recommend:

    •    No local police department or IRS official will call you to ask Social Security, or ask you to provide personal information on the spot.

    •    Do not give out the last four digits of your social security number, your bank details, or even the date of birth when someone asks you to.

    •    Watch out for warning signs, such as the IRS informing you that more than one tax return has been filed using your identity card.

    •    A scammer can use aggressive expressions such as "don't interrupt me while I speak."

    •    Do not click on links or attachments in suspicious emails.

    •    Protect your social security number throughout the year.

    •    Do not leave the information on the tax return open or hidden in the backpack or briefcase left in the car.

    •    Submit your tax return as quickly as possible during the tax season to combat identity theft.

    •    Do not send the tax return from a cafe or other public space. Use a secure Internet connection if you are sending an electronic return. If you are submitting a paper form, send the tax return directly to the post office.

    •    Investigate a tax preparer carefully before submitting personal information.

    •    Review your credit report at least once a year. Make sure no one has opened a new account in your name.

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