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How to Reduce Your Risk During Tax Season

Social security documents to illustrate tax fraud
April 7, 2017

Preparing for tax season

Tax filing fraud continues to be a major problem for Americans. Tax filing fraud (or tax-related identity theft) occurs when someone uses your stolen Social Security number (SSN) to file a tax return in your name in order to claim a refund. Victims are often unaware that this has happened to them until they file their tax return only to discover that a return already has been filed using their SSN.

Tax scams are another common issue. They occur when criminals posing as the IRS, a tax company or a state revenue department contact individuals demanding payment for fraudulent audits or non-existent taxes.

What You
Should Know

Taxpayers can encounter a number of problems during filing season including tax scams and tax filing fraud.

What You
Can Do

Keep your SSN private, look out for popular scams and report any suspicious emails and phone calls claiming to be from the IRS.

Know the warning signs of tax fraud

Be alert. If you are contacted by the IRS or your tax professional/preparer about any of the following, you may be the victim of tax fraud:

  • More than one tax return was filed using your SSN
  • You owe additional tax, incur a refund offset, or have had collection actions taken against you for any year you did not file a tax return
  • IRS records indicate you received wages or other income from an employer(s) for whom you did not work
Taxpayers are estimated to lose up to $5.2 billion annually due to tax identity theft.1

How to reduce your risk of tax fraud

To avoid becoming victim of tax fraud, keep your identity and personally identifiable information (PII) safe by:

Today’s popular tax scams

Criminals are also using a number of different scams to steal money during and after filing season. Be on the lookout for suspicious phone calls and emails. Here are some popular phishing scams:

  • IRS Impersonation Scam: A surge of scammers in recent years have called individuals claiming they’ve been audited and now owe the government thousands of dollars. To add pressure, scammers threaten victims with police arrest, deportation and license revocation if they don’t pay up through some specific payment method.
  • Federal Student Tax Scam: In this example, scammers call parents of students or students themselves claiming they must pay the Federal Student Tax. However, this tax does not exist. Nevertheless, the scammers try to convince victims to wire them money or face police action.2
  • Affordable Care Act Scam: Here, scammers send emails with a single attachment: a “CP2000” IRS tax bill that’s related to the Affordable Care Act. The fraudulent notice includes a payment link plus a request for taxpayers to mail a check made out to “I.R.S.” to the “Austin Processing Center” at a Post Office Box address. In reality, the CP2000 is actually not a bill, but an informational document about proposed tax adjustments.3

Important facts about the IRS

Know what the IRS won’t do to prevent future phishing scams.

  • The IRS doesn’t initiate contact with taxpayers by email, text messages, or social media channels to request personal or financial information4
  • The IRS will not call about taxes owed without first having mailed you a bill5
  • The IRS will never ask for credit or debit card information over the phone or demand immediate payment. They will also not require you to use a specific payment method, such as a prepaid debit card or money order6
  • The IRS will not demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe7
  • The IRS will never threaten to bring in local police or other law-enforcement groups to have you arrested for not paying. The IRS does not threaten taxpayers with lawsuits, imprisonment, or other enforcement action8
Last tax season, the Internal Revenue Service (IRS) identified over $227 million claimed in fraudulent refunds.9

Man holding head while looking through documents to illustrate tax fraud

What to do if you become a victim of tax fraud

The Federal Trade Commission (FTC) recommends these steps:

  • File a complaint with the FTC at identitytheft.gov.
  • Contact any of the three major credit bureaus to place a “fraud alert” on your credit reports:
    • Equifax
    • Experian
    • TransUnion
  • Contact your financial institutions to let them know and ask them how the problem could affect your accounts

If your SSN is compromised and you know or suspect you are a victim of tax-related identity theft, the IRS recommends these additional steps:

  • Respond immediately to any IRS notice
  • Complete IRS Form 14039, Identity Theft Affidavit, if your e-filed return got rejected because of a duplicate filing under your SSN or you are instructed to do so
  • Continue to pay your taxes and file your tax return
  • If you previously contacted the IRS and did not have a resolution, contact them for specialized assistance at 1-800-908-4490

What to do if you receive suspicious IRS-related emails and phone calls

  • If you think you might owe taxes, call the IRS at 1.800.829.1040. IRS employees at that phone line can help you with a payment issue, if there is an issue.
  • You can also file a complaint using the FTC Complaint Assistant; choose “Other” and then “Imposter Scams.” If the complaint involves someone impersonating the IRS, include the words “IRS Telephone Scam” in the notes.10

To report possible tax fraud or tax scams

Report suspicious online or email phishing scams to phishing@irs.gov or by phone at 1-800-366-4484.

If you know you don’t owe taxes or have no reason to think that you owe any taxes (i.e. you’ve never received a bill or the caller made some bogus threats), then call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.11

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