Yes, it’s that time again—tax time.
A few weeks separate us from the April 15 deadline. In preparation, Americans turn to services such as H&R Block, which offers free online filing, and programs such as TurboTax, which takes users through a simple, step-by-step process for anyone looking for a DIY approach.
As if correctly filling out all those forms wasn’t enough, Americans also need to be wary of tax scams. That’s because scammers are never far away when there’s personal information and money to be had. In response, the Internal Revenue Service (IRS) has released their “Dirty Dozen,” a list of the 12 most common tax scams of 2014.
A few of the most recent ones include identity theft, telephone scams, promises of “free money” from inflated refunds, hiding income offshore to avoid being taxed…and the list goes on.
Identity theft is at the top of the IRS’ “Dirty Dozen” list. The Bureau of Justice Statistics estimated that about 16.6 million people were victims of identity theft in 2012. Financial losses as a result of these fraudulent incidents totaled $24.7 billion.
The Federal Trade Commission recommends taking these precautions to protect your identity when filing your tax forms:
- Only use a trustworthy tax service provider. (Check in with the Better Business Bureau to ensure you’re hiring a trustworthy professional.)
- File taxes early so scammers don’t have a chance to file using your Social Security Number.
- Use only secure and trusted methods of delivering forms, such as going directly to the post office or filing via a secure Internet connection.
- Ignore emails asking for personal information.
Telephone scams become more common as the tax return deadline approaches. Scammers call unsuspecting victims hoping to dupe potential victims into handing over money or even their identities.
Here are a few signs that it’s not the IRS on the other end of the line. (FYI, the IRS will typically use snail mail as a first method of contact):
- They call you asking for personal or credit card information and demand prompt payment.
- They ask you to put money on a pre-paid card or wire it directly.
- They verbally abuse you, using rude and/or foul language.
- They threaten to involve authorities and have your driver’s license revoked if you refuse to pay or try to hang up.
Sophisticated technology also allows the scammers to circumvent a caller ID by appearing to be the IRS or local authorities. One scam artist even threatened a police officer when he took over the call from a would-be victim.
You can learn more about other common tax scams by visiting the IRS website. The IRS urges you to contact them at 800-829-1040 if you’re worried about unpaid taxes. Otherwise, incidents should be reported to the Treasury Inspector General for Tax Administration at 800-366-4484.
To help protect yourself in the event the worst still happens, consider adding Identity Recovery Coverage to your homeowners or renters policy. You can learn more and get a quote by contacting CNR First Insurance at 410-897-9890.