The IRS’ 12 Tax Scams to Watch For

A look at the annual 'Dirty Dozen' cautionary report

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The IRS’ 12 Tax Scams to Watch For

Tax season is stressful enough. Workers often have to hunt a stray piece of paperwork, find that shoebox of receipts, hope the line at the H&R Block (NYSE:HRB) isn’t too long and then pray you didn’t leave something out, lest the IRS heavies come knocking down your door a couple months later.

So the last thing anyone wants to do is worry about being scammed. But it’s a big worry. Taxes involve sensitive documents with sensitive information, and there’s countless people out there that want to get their hands on them.

But give the people at the Internal Revenue Service a little credit. Much as we dread and dog them, their annual “Dirty Dozen” report shows they’re at least looking out for us. The report is an annual ranking of tax scams meant to help taxpayers spot schemes and protect themselves from identity theft, among other pitfalls.

Here’s a look at the transcript of the IRS’ report. A complementary video also can be found at the end.

Identity Theft

Topping this year’s list Dirty Dozen list is identity theft. In response to growing identity theft concerns, the IRS has embarked on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.

Identity theft cases are among the most complex ones the IRS handles, but the agency is committed to working with taxpayers who have become victims of identity theft.

The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund.

An IRS notice informing a taxpayer that more than one return was filed in the taxpayer’s name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized.

The IRS has a robust screening process with measures in place to stop fraudulent returns. While the IRS is continuing to address tax-related identity theft aggressively, the agency is also seeing an increase in identity crimes, including more complex schemes. In 2011, the IRS protected more than $1.4 billion of taxpayer funds from getting into the wrong hands due to identity theft.

In January, the IRS announced the results of a massive, national sweep cracking down on suspected identity theft perpetrators as part of a stepped-up effort against refund fraud and identity theft.  Working with the Justice Department’s Tax Division and local U.S. Attorneys’ offices, the nationwide effort targeted 105 people in 23 states.

Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit.  For more information, visit the special identity theft page at www.IRS.gov/identitytheft.

Phishing

Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information.  This includes any type of electronic communication, such as text messages and social media channels.  The IRS has information that can help you protect yourself from email scams.

 
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Article printed from InvestorPlace Media, http://investorplace.com/2012/02/12-tax-scams-to-watch-for-irs-dirty-dozen/.

©2014 InvestorPlace Media, LLC

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