While banks work hard to educate their customers about possible card fraud, this is the time of year when another type of fraud comes to front of the line: IRS tax-related fraud is one of the largest fraud issues in the industry. With current losses estimated to fall in the $6 billion range, tax fraud is expected to boom and grow to four times that amount in the very short term.
Additionally, the government says that more than 19 million suspicious tax returns were stopped - suggesting that there is a consumer (or business) victim behind every case. Many of us already know a family member or a friend who has been defrauded in some way, or we have been tricked ourselves. The most common attacks are taking the form of a call or phishing email that requests information such as a social security number that makes it easy for the criminal to file a fraudulent tax return. This is identity theft at its ugliest.
These phishing attacks are the same kind of attacks we see on the banking side, a prime reason banks communicate and educate their customers on a regular basis on fraud awareness. Other fraudsters buy consumer information on the “dark web” or on the street, which is something law enforcement is always trying to chase down.
To avoid tax fraud, the rules are similar to any sort of credit card fraud – basically be vigilant and cynical and just don’t give out your social security to anyone. That is one “card” that you leave home “without”. But here are some tips to refresh your memory and to help you avoid the fraudsters out to file your taxes before you do:
- Do not respond to any email that looks like it is from the IRS, your bank or any other agency with personal information—especially if they are looking for your SSN, your address, PIN number, or passwords. Many of us in our busy lives are on “auto pilot” for email response and do not practice “email safety”. The IRS or your bank will never ask for personal information from your email.
- Do not click on an email link unless you have been involved in the process, such as a request to update your password that you have not requested. This applies to the IRS, your bank, or any business you may or may not do business with.
- If you receive a phone call stating they are from the IRS, or any other agency, do not give out personal information. If it is a legitimate call, that agency will already have your details.
- If you suspect you have been a victim of tax fraud call the IRS and report your suspicion immediately.
- Keep your tax records on file; this is a good practice anyway, in case you are audited, but they can also support you in the event of possible fraud.
- Your tax preparer or advisor can offer good advice and guidance during a fraud investigation. Unfortunately, this process can be long and confusing if you become the victim of a complex fraud scenario. The best approach is to make sure you don’t fall victim to one of the phisher’s scams.
Tax filing season is just around the corner – file early but not “often” to get ahead of the fraudsters on your trail.