| January 31, 2014

Tax time is scam time: 4 ways to stay safe

Millions of Americans will become victims of a crime they never heard of

What’s worse than paying taxes? Getting your identity stolen while you pay your taxes. And it’s more common than you think. Especially this time of year.

“Tax identity theft is rampant, and the crime only gets worse during tax season,” says Judy Sorensen, president of the Association of Credit Counseling Professionals (ACCPro), the nation’s fastest-growing trade association for credit counselors. Consolidated Credit is a member.

Sorensen says 2.5 million Americans were victims of “tax ID theft” last year – more than double the 1.2 million the year before.

“Although the IRS is stepping up efforts to prevent these fraudulent tax filings, it’s still up to consumers to be vigilant and protect themselves,” Sorensen says.

So what is tax ID theft? And how can you protect yourself from it?

How the scams work

Tax ID theft comes in many flavors. But they all end up in the same place, the ACCPro says: “Imagine filing your federal taxes with the Internal Revenue Service, only to have your tax return rejected because some crook has already used your Social Security number and claimed a bogus tax refund.”

Scammers can get your information by stealing it online or from rifling through your garbage, which are common tactics for your run-of-the-mill ID thieves. But some tax ID thieves also set up shop as tax preparers – giving them access to all you crucial data.

What you can do

Here are Sorensen’s four best tips…

  1. File early – well before the April 15 tax deadline. “The easiest way to prevent tax identity theft is to file your taxes early,” Sorensen says. The earliest this year is Jan. 31.
  2. Beware of IRS impersonators. “One of the sneakiest ways that con artists commit tax ID theft is by calling you and pretending be from the IRS,” Sorensen says. “By posing as an IRS agent, the thief simply asks for your Social Security number – and a shocking number of people unwittingly reveal it.” Remember, the IRS never calls – it only contacts you through the Post Office. Here’s more from the IRS on these scams.
  3. Steer clear of shady tax preparers. The IRS says 60 percent of us don’t file taxes on our own – we go to “tax preparers.” Most are honest. So how do you spot the cheats? ACCPro says check with the Better Business Bureau and hire preparers who “enter their IRS Preparer Tax Identification Numbers and sign tax returns.” Sorensen explains, “It’s a big red flag if someone asks you to sign a blank tax return and let him or her fill it out.”
  4. Protect personal data in and around your home. “Safeguard your information as much as possible,” Sorensen says. “That goes for your Social Security number, driver’s license, credit cards and bank account data,” She suggests changing online passwords regularly, removing your Social Security number from your wallet, using a locked mailbox, and shredding documents before tossing them.”

If death and taxes are the only sure things in life, Sorensen says tax ID theft is sadly not far behind. Take these precautions to keep yourself safe.

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