Personal Finance: IRS and fraudsters both want your Cash at tax time

Albert Einstein stated that the hardest thing in the world is the income tax. But Einstein did not need to run the gauntlet of people and fraudsters which make tax time even more complex and potentially treacherous. Here is our annual look at shared scams aimed at taxpayers and the way to defeat them.

To begin with, a little good news. The IRS reports that incidents of identity theft declined by 40 percent in 2017 versus the year earlier and 65 percent since 2015, thanks in part to increased awareness and diligence on the part of taxpayers. The good thing: crooks are working overtime to enhance old cons and develop new ones, requiring continuous vigilance to protect against falling victim.

Photo from Contributed Photo /Times Free Press.

Among the most recent twists involves fraudulent refunds sent to taxpayers’ bank account. After inventing sufficient info to submit a tax return in the victims’ names and directing a refund to their actual bank accounts, the swindlers then perpetrate one of many schemes to get their hands on the loot.

In 1 version of the con, the fraudster introduces as an agent of a debt collector also claims to be working on behalf of the IRS to reclaim a refund sent in error. The victim is advised to return the money to the bogus agency via wire or prepaid card card.

In a variant of the plot, the perpetrator uses an automated phone message purporting to be from the IRS demanding return of the refund and threatening detain or placing the victim’s Social Security number to get a non existent “blacklist.” The automated call contains a bogus case number along with a phone number to call to make payment arrangements.

The two of those cons have increased dramatically this tax year.

Increasingly, the information needed to submit the false tax returns will be coming out of breaches in the computer systems of tax preparers. The IRS is warning tax specialists to apply heightened security measures to protect customer information and personally identifiable information. Taxpayers are advised to ask of the tax preparers regarding enhanced safety precautions to minimize the danger of information loss.

Even though the incidence of straight identity theft leading to stolen refunds has declined, the IRS cautions that there’s a potential for an uptick this season because of the large data breach at Equifax which could have impacted 143 million Americans. In general we’re more conscious, but currently there are many more possible victims at the pool.

Telephone scams are back this season also, however a specially detestable iteration has reared its ugly head. Callers claiming to be IRS agents are targeting current polls, sometimes in their own languages. In many cases, the callers have shifted their caller ID screen to convince the target which the IRS is indeed calling. The thieves tell victims that they owe back taxes and require payment by wire or debit card. In many despicable cases, aims are threatened with deportation or arrest.

Be on guard against people along with other potential scams. The IRS will never demand immediate payment by wire, gift card or debit card. It won’t contact you by telephone, social networking or email to commence activity in a valid inquiry. Generally, the agency advises taxpayers of pending issues by U.S. email, and you may easily confirm the veracity of the claim. Never click on sites in unsolicited mails, and consume energetically on any sudden caller claiming to be from the IRS.

If you believe you’re targeted by means of a tax scammer, get in touch with the Treasury Inspector General at 800-366-4484.

Christopher A. Hopkins, CFA, is a vice president and portfolio manager at Barnett & Co. at Chattanooga.