IRS Releases Top Tax Scams of 2014

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On February 19th, the IRS released its annual list of the top tax scams for 2014. As more taxpayers prepare, file, and store their data online, incidents of crimes like identity theft, phone scams and phishing increase. While these scams happen year round, the IRS warns taxpayers to be particularly cautious during tax season. Here’s what to look out for.

Identity theft tops the IRS’s list of most pervasive tax scams in 2014. This is a broad term that encompasses any time someone uses your personal information like your name, Social Security number or driver’s license without your permission to commit fraud. During tax season, many victims find that their identity has been used to file a false tax return and claim a refund.

The problem has become so prevalent that the IRS has a dedicated department to assist victims – the IRS Identity Protection Specialized Unit. If you think you may be the victim of tax-related identity theft, the department can be reached at 800-908-4490. The IRS also maintains a special page on their website (www.irs.gov/uac/Identity-Protection) with information, tutorial videos and web links to help victims and those looking to take steps to protect themselves.

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The most common way that criminals steal personal data from victims is through “phishing.” In many cases, perpetrators send unsolicited emails that are designed to look as though they generated from the IRS or another government agency. The sender address is often “spoofed,” making it appear to the recipient as though the message was sent by a legitimate IRS or government email address.

IRS Commissioner John Koskinen warns, “Taxpayers should be on the lookout for tax scams using the IRS name. These schemes jump every year at tax time.” It’s important to remember that the IRS will never send an email or text message to a taxpayer to request personal or financial information. The IRS will never send you a message through social media like Facebook or Twitter.

Another common phishing method is to create a fake website that looks like a legitimate government page. Criminals will create very convincing webpages and then circulate links via email or text. Clicking on the link will take the victim to a page that requests that he or she enter personal information to identify or authenticate their account. Never provide information on a webpage that you access via a link in an email or on an unrelated web page. Always type the IRS web address (www.irs.gov) into your browser directly and navigate to the specific page you need from there.

The IRS reports a recent increase in the number of phone scams taking place across the nation. Callers pretend to be from the IRS and use various tactics to try to extort money from victims. Scammers typically offer fake IRS badge numbers and use common names and surnames (like Sandra Lewis, or James Williams). Victims have reported hearing background noise of other calls being conducted, mimicking a large call center. Some scammers can recite the last four digits of the victim’s Social Security number and/or make the call appear as the IRS toll-free number on your caller ID.

In some cases, callers are aggressive and even hostile, insisting that the victim owes fines or penalties and threatening arrest or driver’s license revocation if money isn’t paid immediately. Sometimes these calls are quickly followed by a call from someone claiming to be with local law enforcement or the DMV in order to add legitimacy and intimidate the victim into paying. Victims are often told that money must be paid immediately via wire transfer or a pre-loaded debit card.

Other scammers take the opposite route, claiming that you’re entitled to a sizeable refund. They request that you provide personal information or bank account information so that they can “process your refund.” The data collected is used instead to perpetrate identity theft or steal money from your bank account.
In any case, if you receive a call from someone claiming to be from the IRS it’s best to hang up and call the IRS directly at 800-829-1040. IRS employees can assist you to determine if you do, in fact, owe taxes, fines or penalties.

Be wary of web sites or solicitations from anyone claiming to be able to get you a “huge refund!” or “credits no one else can find!” Fraudulent tax preparers will file falsified returns, claiming credits you don’t actually qualify for or changing your income information in order to generate a larger refund. In some cases they’ll have your refund deposited to their account and/or claim a large percentage as a fee, but it is ultimately the taxpayer’s responsibility to ensure that data filed is accurate. If your return is identified by the IRS to be fraudulent, you could be assessed up to $5,000 in penalties.

Be sure that you utilize a reputable tax preparer, that they sign the returns they prepare and enter their IRS Preparer Tax Identification Numbers (PTINs), and provide you with a copy of your return.

About The Author: Andrea Andrea Eldridge is CEO and co-founder of Nerds On Call, a computer repair company that specializes in on-site and online service for homes and businesses. Andrea is the writer of a weekly column, Nerd Chick Adventures in The Record Searchlight. She prepares TV segments for and appears regularly on CBS, CW and FOX on shows such as Good Day Sacramento, More Good Day Portland, and CBS 13 News, offering viewers technology and lifestyle tips. See Andrea in action at callnerds.com/andrea/.