Taxpayers, beware of fraudsters out to trick you for your information.
Tax return identity theft has reached such epidemic proportions that it tops the list of the IRS’s Dirty Dozen Tax Scams. Here are tips the IRS wants you to know about identity theft so you can avoid becoming a victim.
- Phishing: Taxpayers should be alert to potential fake emails or websites looking to steal personal information or other financial scams related to COVID-19. The IRS will never initiate contact with taxpayers via email about a bill, tax refund or Economic Impact Payments. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information.
- Phone Scams: Phone calls or vishing (voice phishing) from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things.
- Social Media Scams: Scammers use COVID-19 events and social media messaging to convince victims that they are dealing with someone’s family, friends or co-workers. Instead, the email includes malware used to commit additional crimes.
- Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. There are some dishonest preparers who operate each filing season to scam clients, perpetuating refund fraud, identity theft and other scams that hurt taxpayers. Check out the IRS’ special page for tips on choosing a preparer.
- Fake Charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate charities. IRS.gov has a search tool taxpayers can use to check out the status of charitable organizations.
- Ransomware: Taxpayers should be alert to this growing cybercrime where malware targets human and technical weaknesses to infect a victim’s computer, network or server. Once the system is infected with malware, ransomware looks for and locks critical or sensitive data with its own encryption. Victims receive an anonymous ransom request usually demanding payment in virtual currency such as Bitcoin. The IRS and its Security Summit partners advise tax professionals and taxpayers to use tax preparation software products’ free, multi-factor authentication feature to protect against data thefts.
Identity theft is scary and expensive for both individuals and businesses, but there are ways to protect yourself. Refer to the Taxpayer Guide to Identity Theft or the IRS Identity Theft Protection page on the IRS website, and then ask your independent insurance agent for more information about data compromise and identity theft coverage.
This loss control information is advisory only. The author assumes no responsibility for management or control of loss control activities. Not all exposures are identified in this article. Neither The Cincinnati Insurance Company nor its affiliates or representatives offer tax or legal advice. Consult with your tax adviser or attorney about your specific situation. Contact Landmark Risk Management & Insurance for coverage advice and policy service.