Thanks to Equifax, the risk of fraud is higher this tax season
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For those early birds out there, you can start turning in your tax returns today. Tax season is officially here, which also means its tax fraud season — a time when tens of millions of people become more susceptible to having their personal information stolen and scammed out of money.
The risk may be even bigger this year since just months ago we saw one of the largest data breaches ever of personal information: the Equifax hack.
“That’s exactly the kind of data that the criminals use to commit tax refund fraud and other kinds of tax scams,” said Avivah Litan, a cybersecurity analyst at Gartner.
The most common scam is when someone files for a refund in your name. And if they don’t already have your personal information, criminals often try to get it through email or phone scams…pretending to be the IRS. “Like telling you to come to their site to get the refund or telling you that you’re being fined, or under investigation,” said Litan.
The IRS has been warning taxpayers about such scams for years. From October 2013 to January 2017, over 10,000 victims collectively paid over $54 million as a result of phone scams, the agency said last year.
“Don’t be fooled by surprise phone calls by criminals impersonating IRS agents with threats or promises of a big refund if you provide them with your private information,” then-IRS Commissioner John Koskinen warned at the time. And if you do get a call from someone pretending to be an IRS agent, you should just hang up. “If you’re surprised to get a call from the IRS, it almost certainly isn’t the real IRS. We generally initially contact taxpayers by mail.”
Besides warning taxpayers against scams, IRS is also trying to combat fraud by delaying refunds for people claiming the Earned Income Tax Credit or the Additional Child tax credit, said Nathan Rigney, a tax research analyst at the Tax Institute at H&R Block. “Because those credits are target-rich for tax identity thieves, this allows the IRS to match the information on those returns to W-2s,” he explained.
The earliest those refunds will be issued this year is mid-February, according to the IRS. “The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2018, if they chose direct deposit and there are no other issues with the tax return,” the agency said earlier this month.
But the surest way to avoid scams this year? File early, said Rigney.
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