7 Tips to Avoid Identity Theft During the 2021 Tax Season
As the U.S. tax filing season kicks off, it’s important to be on the lookout for tax scams. For the past few years, the Internal Revenue Service (IRS) has issued a Dirty Dozen list of tax scams, which in 2020 included phishing, fake charities, and return preparer fraud. Also In 2020, the IRS alerted taxpayers to be on the lookout for a surge of calls and email phishing attempts about COVID-19 as these can lead to tax-related fraud and identity theft. In 2021, tax filers should still take precautions to avoid these scams.
Here are some ways you can protect yourself. We encourage you to share these tips with your colleagues, family, and friends as appropriate.
Tip 1: File as Early as Possible
Even though tax returns are not due until April 15, we recommend filing as soon as possible to get ahead of potential fraudulent filings submitted on your behalf.
Tip 2: Think Before You Click or Respond
The IRS has made it very clear that they will first contact you by mail, not by phone, email, or text. The IRS will not require an immediate payment or transfer. The IRS urges anyone who believes they may have received a fraudulent tax email to not click any links in the email and to forward the email to [email protected]
Tax scams that happen via telephone call or text message often have common characteristics that you can look out for to identify a fake, including:
- Fake names and IRS badge numbers. Look out for common names and surnames.
- Scammers may know the last four digits of your social security number ("SSN") and will threaten to suspend or cancel your SSN.
- The IRS toll-free telephone number can be spoofed on caller ID.
- Telephone scammers may follow up with an email containing a link to a fraudulent website that is often malware infected.
- Background noise that sounds like a call center.
Be diligent and do not provide your information over the phone or by text.
For more information, see the IRS' resources on identity theft prevention and detection.
Tip 3: Check Your Credit Report
Protect your SSN and your credit history. Confirm that no one has opened an account in your name and freeze your credit (free) with the three credit bureaus (Equifax, Transunion, and Experian).
Tip 4: Verify Schedule K-1 and W-2 Form Requests
We urge caution when responding to requests from purported investors, clients, employees, or tax advisers for K-1 or W-2 forms, as these requests may be fraudulent. Be sure to password-encrypt K-1, W-2, and 1099 documents when sending them to individuals, and do not distribute the password via email. We recommend that you use password-protected portals for transferring such documents.
Tip 5: Use Secure File Transfer With Your Tax Preparer
Tax preparers are targets as well. Be sure to verify the credentials of your tax preparer and only use secure internet connections to upload tax return information.
Tip 6: Validate Charities Including Those Related to Natural Disasters
Fraudulent charities have become common. Many look to raise funds for those affected by natural disasters. Attackers will use breached email boxes to send support requests for these charities to victims. Before providing a credit card or payment to a charity, validate whether the charity is legitimate.
Tip 7: Raise Awareness
We urge you to share this information with family, friends, colleagues, and staff. If you or someone you know has been the victim of identity theft or a fraudulent wire transaction, reach out to your local police department and/or the FBI for assistance.
Additional FTC and IRS Resources
The FTC and IRS have provided many resources for you and your employees to learn how to identify, report, and avoid tax scams. We encourage to you to check out these resources:
- IRS Tax Scams/Consumer Alerts
- How to Spot Imposter Scams
- FTC Identity Theft Awareness Week Resource Page
- IRS’s Taxpayer Guide to Identity Theft
ACA Aponix provides cyber awareness resources year-round that you can share with employees, friends, and family, including:
We also offer online cyber awareness training courses.
If you have any questions, please contact your ACA Aponix consultant or email us at [email protected].