4 common tax frauds and ways to protect yourself from them - ForumDaily
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4 common tax frauds and ways to protect yourself from them

Tax fraud occurs all year round, but during the tax season (this year it is from January 27 to April 15), their number usually increases. Of the tax frauds reported last year in the Better Business Bureau scam tracker, 61% were disclosed in the first four months of the year, reports Cnbc.

Photo: Shutterstock

Young Americans are more likely than others to lose money due to scammers.

According to the Federal Trade Commission for 2019, last year, almost one in three Americans between the ages of 20 and 29 reported a loss of money as a result of fraud. But only about 13% of them reported this to the police. According to the Internal Revenue Service (IRS), since 2013, tax fraud has cost their victims more than $ 23 million.

The most common type of fraud is identity theft. Last year, the Federal Trade Commission (FTC) received more than 650 individual reports of identity theft. Often this type of fraud follows tax fraud.

Below we will look at the four most common types of tax fraud you may encounter, and how to avoid becoming a victim of them.

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  1. Tax fraudsters

Although most tax professionals are honest and provide legitimate services, there are bad guys. The fraud emanating from these individuals can occur in several ways. Sometimes an unscrupulous drafter prepares tax refunds using false information to increase the amount of return. While others are trying to steal personal information recorded in tax documents.

  1. Phishing

This type includes the use of fake emails, advertisements or websites to obtain personal information. It takes place all year round. Usually, hackers send a so-called phishing email, in which they imitate the email of a store, company or friend, and add a link to a fake portal requesting your data.

The tax season is the time of year when data begins to be sold specifically for tax fraud, says Emily Wilson, vice president of research for digital risk protection company Terbium Labs.

“Those who buy such information can use it not only for tax, but also for other types of scams,” says Wilson. “In some cases, these records are resold.”

  1. Telephone scammers

Perhaps the most common tax fraud is telephone fraud, when criminals posing as IRS agents call you and threaten everyone: from arrest to deportation, if you do not pay an allegedly overdue tax invoice. According to the IRS, they "remain a constant threat to taxpayers."

Last year, scammers faked the telephone number of the IRS Taxpayer Advocate Service office so that their calls could be mistaken for real ones. These calls were identified as from the IRS. But keep in mind that the IRS will never require immediate payment using debit cards, gift cards, or bank transfers. If you really owe money, the IRS will mail you the invoice first.

  1. Tax theft

This usually happens when a fraudster uses your information to get a refund from the IRS before you even file your return. Criminals usually get your social security number and personal information at the beginning of the season to file a fraudulent tax return. Sometimes scammers use the information of a deceased taxpayer to try to get a refund.

You can also see a variant of this scam when someone stole your social security number and is tax free. Another common form of identity theft during the tax season is when someone claims that your children are dependents.

How to protect yourself from tax fraud

There are dozens of steps you can take to avoid becoming a victim of tax fraudsters and protect your information. But not everyone has the time (or patience) to go to extremes. Here are seven easy ways to protect yourself that help you avoid many common threats. And if you suspect that you have become a victim of a fraudster, notify the Inspector General of the Treasury for Tax Administration by calling 1-800-366-4484.

  1. File your declaration as early as possible.

If you have not filed tax returns, do so as soon as possible. According to Wilson, the tax filing system works to some extent on a first come, first served basis. Without delaying the filing of the declaration, you can defeat the criminals.

“Fraudsters understand that if they file a tax return that looks legitimate enough, they will get paid before the IRS detects it,” Wilson explains.

  1. Keep Your Social Security Number Safe

According to James Lee, chief operating officer of the Identity Theft Resource Center, during a recent tax fraud webinar, they talked about a lot of identity theft. “It all starts with someone having your Social Security number,” he says. “This information can fall into the hands of fraudsters if, for example, you lose your smartphone or wallet.”

Leave any documentation with your social security number at home and be sure to lock your smartphone, Lee recommends. If possible, avoid downloading sensitive data to your devices.

  1. Protect your registration

Keep your tax returns away from thieves. If you are applying online, file it through a secure connection - do not register your taxes using public Wi-Fi. If you are submitting paper documents, take them directly to the post office and mail them. Thus, no one will be able to steal your tax forms from the mailbox, which contain a lot of personal data. Unfortunately, there have been cases when thieves stole tax returns directly from personal mailboxes.

  1. Be aware of potential data leaks.

“Data leakage is an important source of information that people need to steal tax information or start the theft process,” Lee explains. Even if cyber criminals have several pieces of information, they can attack you using a phishing attack (which can be more than just a fake email) to get the rest.

When reported, be sure to take appropriate steps to protect your information, including changing passwords, monitoring your credit reports, and adhering to cyber hygiene rules.

  1. Look for signs of fraud

If your social security number has been lost, stolen, you are at greater risk of stealing tax information. If you encounter any of the following situations, pay attention to this, report it and avoid transmitting any information to the sender:

  • You receive letters allegedly from the IRS about a tax return that you did not file. ”
  • You cannot submit your tax return due to duplicate social security numbers.
  • You will receive a notification that an online IRS account has been created in your name or that your existing account has been opened or disabled if you did not take such actions.
  • You are notified that the IRS records indicate that you received a salary from an employer you did not work for.

Keep in mind that the IRS does not initiate contact via email, text messaging or social media channels to request personal or financial information. If they really need to contact you, they will first send you a regular letter.

  1. Only work with conscientious drafters

“When you are looking for someone to help you with your tax filing, make sure you are dealing with a reputable company and reliable service provider,” Lee recommends.

Qualified specialists will have an identification number, which you can find on the IRS website.

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  1. Freeze your credit

If you block your credit reports, no one will be able to take a credit card or a loan in your name. It’s also free. Freezing your loan in the first place will not allow criminals to use it.

You must also freeze the loans of children or any minors in your family. You should contact the three major Equifax, Experian, and TransUnion credit bureaus individually and request this lockout. As a rule, you will need to verify your identity and provide a copy of your child’s birth certificate or social security card.

In addition to these steps to protect themselves, Wilson advises Americans to remain vigilant year-round.

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