Each year, the IRS publishes a list of the 12 most pervasive tax-related scams, nicknamed the “Dirty Dozen”. For 2014, 3 of them involve some form of identity theft.
Basic identity theft is something many people don’t associate with taxes, but mostly with thieves opening credit cards, taking out loans, or fraudulently using stolen bank information to make purchases. For the past few years though, fraudsters have been using the IRS E-File system, along with the direct deposit option for refunds, to file fraudulent tax returns, claim false income and withholding, and get refunds deposited to their accounts before the IRS or taxpayer can take notice. Most only find out once they try to file their own, legitimate tax return and find that one has already been filed.
The next two are the same scam in different forms. The scammers reach out to taxpayers, either via phone or e-mail, and try to trick their targets into revealing personal information about themselves that can then be used to steal the victim’s identity. These scams have become increasingly complex in the last couple of years, with scammers now “spoofing” caller ID systems to show the call is coming from a legitimate IRS call center, and that e-mails are coming from actual IRS e-mail addresses.
The best defense in these cases is still a good offense. Shred or otherwise destroy any documents that you no longer need and which have your name, address, date of birth, or especially social security number on them. Keep documents you need to retain with that kind of information in a safe place.
Know that the IRS almost always reaches out via a letter through the mail, and not via phone or e-mail. If you get a call or e-mail stating it’s from the IRS and you have no reason to think they would be trying to get in touch with you, don’t provide any information, and instead call the IRS back on one of their published contact numbers, such as 1-800-829-1040, to confirm the contact is legitimate.