Three Scams To Watch Out For This Tax Season
In the early 60s, Roger Maris and Mickey Mantle hit a remarkable number of home runs including a famous back-to-back four-bagger, which according to Yogi Berra was the reason he famously quipped, “It’s déjà vu all over again.”
While we may still be in the early days of spring training, we’re in the thick of a tax season, where legions of scammers are swinging for the back wall. According to the IRS, there was a 400% increase in phishing and malware incidents during the 2016 tax season. With the April 15 filing deadline still feeling as far away as the Green Monster from home plate in Fenway Park, Yogi Berra’s other dictum — it ain’t over till it’s over — was never more true.
The book “Swiped: How to Protect Yourself in a World Full of Phishers, Scammers and Identity Thieves” goes into great detail about the various tactics cyber criminals use to lure you, but the most important thing you can do to keep yourself scam-free this tax season is educate yourself on the most prevalent risks out there.
As ever the best (yet pretty boring) advice is to file your taxes as early as possible. Tax-related identity theft is primarily aimed at grabbing your tax refund, and scammers are creative, sophisticated, persistent, and move very quickly once your information is in hand. Armed with your Social Security number, date of birth and a few other pieces of your personally identifiable information, which if you have been involved in a data breach (you can check here to see warning signs and view two of your credit scores for free on Credit.com) is likely available on the dark web, they are off to log on to motels’ Wi-Fi networks, bunny-slippered feet resting comfortably on coffee tables, furiously filing fraudulent tax returns online.
Here are some other things to bear in mind as the tax season is upon us:
There is no bigger threat. Phishing was recognized as a word by the Oxford English Dictionary more than 10 years ago, which is the main reason I thought of Yogi Berra’s déjà vu quip. By now it is a home truth that there are phishers out there. Catfishing is a regular part of the popular imagination, and phishing emails hit our inboxes with the same regularity as the various promotional emails we get from retailers and media outlets.
Phishing emails take many forms, but they are most commonly pointed at getting enough of your personally identifiable information to commit fraud in your name (identity theft). They also commonly contain a link that places malware on your computer. These programs can do a variety of things (none of them good), ranging from recruiting your machine into a botnet distributed denial of service attack to placing a keystroke recorder on your computer to access bank, credit union, credit card and brokerage accounts to gathering all the personally identifiable information on your hard drive.
Here’s what you need to know: The IRS will never send you an email to initiate any business with you. Did you hear that? NEVER. If you receive an email from the IRS, delete it. End of story. Oh, and they will never initiate contact by way of phone call either. That said, there are other sources of email that may have the look and feel of a legitimate communication that are tied to other kinds of tax scams.
2. Criminal Tax Preparation Scams
You learned how to do homework in school for this reason: Not all tax preparers are the same and you must vet anyone you’re thinking about using well before handing over a shred of your personally identifying information. Get at least three references, check online if there are any reviews and call them.
Here’s why: At this time of the year, tax prep offices that are actually fronts for criminal identity theft tend to pop up around the country in strip malls and other properties and then promptly disappear a few days later. Make sure the one you choose is legit.
3. Shady Tax Preparation
Phishing emails may not be aimed at stealing your personally identifiable information or planting malware on your computer. They may be simply aimed at getting your attention and business through enticing (and fraudulent) offers of a really big tax refund. While these preparers may get you a big refund, it could well be based on false information.
Be on the lookout for questions about business expenses that you did not accrue, especially watching out for signals from your preparer that you are giving him or her a figure that is “too low.” Other soft-cons of shady tax preparation include inflated deductions, claiming tax credits to which you are not entitled and declaring charitable donations you did not make.
Bottom line here: We’re all connected these days, and chances are you will get caught, so just make sure you are working with someone who follows the instructions (yes, they’re complicated, and that’s why it’s not a bad idea to get help).
As Yogi Berra said, “You can observe a lot by watching.” Tax season is stressful without the threat of tax-related identity theft and other scams. It’s important to be vigilant, because, to quote Yogi all over again, “If the world were perfect, it wouldn’t be.”