Tax time is approaching, and so, unfortunately, is the season for tax refund fraud. Here’s what you need to know to protect yourself.
How does tax refund fraud work?
Typically, nearly 3 in 4 U.S. tax filers get a refund. Online thieves know this, so they use stolen Social Security numbers to file income taxes early and claim the refund before the rightful recipient can.
How do thieves steal Social Security numbers? Sometimes they obtain them via data breaches. And sometimes, they get the information directly from their intended victims. Scammers call (or email) taxpayers, claiming to be with the IRS. They may demand personal information, like asking you to “confirm” your Social Security number. Or they may claim that you are behind on your taxes and issue threats.
Here are some of the most common tax refund scams, according to the IRS.
How can you avoid being defrauded?
Don’t believe the caller, says Gopal Padinjaruveetil, chief information security officer for AAA.
“The key thing to remember is that the IRS never calls,” Padinjaruveetil says. “Taxpayers have rights. The IRS can’t change your immigration status; it can’t revoke your driver’s license; and it will never threaten to immediately arrest you or demand on-the-spot payment.”
Also, the IRS will never initiate contact with taxpayers via email about a tax refund or bill. “If there is a problem, the IRS will send you a physical letter,” he says. “Probably more than one. There’s a process they have to follow.”
If you are a victim of tax refund fraud, contact the IRS immediately and visit identitytheft.gov for ways to protect yourself and your financial accounts.