By Jeffrey R. Wolfe, Senior Vice President, Manager of Wealth Planning Strategies

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Each year the IRS announces its “Dirty Dozen” of tax scams.  These are the most common and most dangerous scams that affect taxpayers.  The top three, for the second year in a row, are:

  • Phishing: Phishing is when scammers send fake emails or website links to try and trick a taxpayer into sharing private information.  The scammer then uses the private information to file a false tax return to steal your refund, or utilizes the information to hack into other resources you may have (bank accounts, credit cards, etc.).  The IRS specifically states that it will NEVER initiate contact with a taxpayer regarding a tax bill or refund via email.  If you get such an email, immediately delete it.
  • Phone Scams: Another common scam involves fraudsters calling taxpayers over the phone and impersonating the IRS.  Often these calls target elderly taxpayers or those that may have English as a second language.  The calls are often aggressive; threatening big fines, jail time, or even deportation unless an immediate payment is made via gift cards, debit cards or wire transfers.  Again, the IRS reminds us that they will not make initial contact over the phone.  The IRS also states they will they never ask for payment via these untraditional methods, nor will they threaten immediate criminal charges.
  • Identity Theft: While identity theft is a year-around issue, criminal activities around identity theft increase during tax season.  Scammers look for access to social security numbers and other private information that will allow them to file a false tax return in an effort to steal your tax refund, or they may try to open credit card accounts in your name.  Vigilance regarding your personal information is the best protection against this type of attack.

What this all means is that you need to be on the lookout for scammers and thieves. The IRS is doing their best to help you as well. They recommend the following key points:

  • Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and can automatically update. Encrypt sensitive files such as tax records you store on your computer. Use strong passwords.
  • Learn to recognize and avoid phishing emails, threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card company and even the IRS. Do not click on links or download attachments from unknown or suspicious emails.
  • Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure. Treat your personal information like you do your cash; don’t leave it lying around.

There are recommended links to review as well. To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. You also can read Publication 4524, Security Awareness for Taxpayers.  If you are interested in the rest of the Dirty Dozen, you can review the list here.

If you expect a refund, make sure you get it!  Remain diligent when managing your tax preparations, and if something seems “phishy” from the IRS, trust your instincts and question what’s going on to help avoid being scammed.

Benjamin F. Edwards and Co. does not provide tax advice, therefore it is also important to consult with your tax professional for additional guidance tailored to your specific situation.