Benjamin Franklin is often credited as saying, “In this world nothing can be said to be certain, except death and taxes.”
If Franklin were alive today, besides being relieved electricity has evolved beyond a kite and key in a thunderstorm, he might add a third item to his list of permanent things in life: scams focused on taxes.
We are now in the midst of what many identity thieves view as “the most wonderful time of the year” – tax season. The massive amount of financial data and key personal information being exchanged in the weeks leading up to April 18 is a virtual treasure trove for evil doers who specialize in scams and identity theft.
While these types of crimes are permanent – and increasing each year – that doesn’t mean you have to be one of the statistics. In the first installment of this two-part series, I will arm you with helpful information you can use to reduce your odds of becoming a victim of tax-related identity theft. Your biggest defense shield is simply being aware of the methods criminals use to try and scam you.
1. Be aware of how the IRS will contact you
If the IRS needs to contact you, they will first send you a letter (called an IRS notice) through the U.S. Postal Service. Such a letter will not be threatening, but will explain why you are being contacted and provide next steps. Any IRS contact information provided should be confirmed on the official IRS website (https://www.irs.gov/).
In extremely unusual instances, the IRS may contact you by phone. This would occur only after you received one or more IRS notices via postal mail and did not reply.
Even more rare would be a situation where an IRS revenue agent comes to your home or business as part of an audit or under the pretext of delinquent taxes or tax returns. In such an instance, you would be made aware of this visit in advance or at a minimum that the IRS was trying to contact you.
2. Be aware of how the IRS will NOT contact you (but the fraudsters will)
However, per the official IRS web site: “The IRS will never demand immediate payment, threaten, ask for financial information over the phone, or call about an unexpected refund or Economic Impact Payment. Taxpayers should contact the real IRS if they worry about having a tax problem.”
3. In addition to knowing the ways the IRS will and won’t contact you, consider these helpful tips of things the IRS will never do
4. When filing your taxes, never use a “ghost tax preparer”
Always research your tax preparer. “Ghost preparers” are people who pose as tax prep professionals but are not properly licensed. They don’t sign the returns they prepare – a huge red flag – and any errors they make in filing the return will become the responsibility of the taxpayer. They may charge for filing a return that is not needed or will ask for payment upfront for an inflated refund.
A legitimate tax preparer will have a Preparer Tax Identification Number (PTIN). It’s a good idea to ask your tax preparer to sign and include this on your return. Any reluctance on these steps is a warning sign they’re likely a ghost preparer.
These four tips can help protect you from being a victim of tax fraud scams. But what if you believe your information has been compromised? Reach out to our team today to discuss your options.
Ellerbrock-Norris Wealth Strategies is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.