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Security Awareness for Taxpayers

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As tax season will be underway the tax scams are picking up.

Here are a few things you can do in order to protect yourself from these scams according to the IRS.

 

Note that the IRS will never:

 

1) Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.

2) Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.

3) Require you to use a specific payment method for your taxes, such as a prepaid debit card.

4) Ask for credit or debit card numbers over the phone.

5) Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

 

If you don’t owe taxes, or have no reason to think that you do:

 

1) Do not give out any information. Hang up immediately.

2) Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.

3) Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

 

 

 

More information:

Security Summit Identity Theft Tips Overview
Tax Scams

 

IRS websites:

https://www.irs.gov/uac/Tax-Scams-Consumer-Alerts
https://www.irs.gov/uac/IRS-Urges-Public-to-Stay-Alert-for-Scam-Phone-Calls

 

 

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Florida Number One In Identity Theft

ID Theft

 

 

Identity theft as defined by the IRS occurs when someone uses your personal information such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes.

 

“Identity theft continues to top the Federal Trade Commission’s national ranking of consumer complaints, and American consumers reported losing over $1.6 billion to fraud overall in 2013, according to the FTC’s annual report on consumer complaints released today.”

Information Valuable to Identity thieves:

  •         Name, address
  •         Date of birth
  •         Medicare card number
  •         Driver’s license number
  •         Social Security number
  •         Passwords

How does Identity theft happen?

  •          Data breaches
  •          Phony emails from imposters
  •          Social networking
  •          Stolen wallets
  •          Corrupt tax preparation services

Warning signs:

  •         Unusual delay in getting a refund
  •         IRS notifications:

o   Duplicate tax return filing

o   Unreported income

o   Duplicate dependents

Although there are many ways someone may try to steal your identity there are many ways to reduce the risk of theft.

  1.       Minimize personal information kept in your purse, wallet and smartphone.
  2.       Shred documents with any personal information.
  3.       Do not give out personal information.
  4.       Do not click on links sent from strange emails.
  5.       Use complex passwords
  6.       Check your annual credit reports, one CRA every quarter.

 

In previous posts we have said how it is important to trust your tax preparer as you have voluntarily given them the information needed to steal your identity. According to a Treasury Department report, in 2012 there were more than 1.8 million cases of stolen returns from taxpayer identity theft. This crime costs taxpayers billions of dollars every year and the statistics show that is it growing. Which state is currently leading the country in the number of cases, none other than our very own sunshine state Florida.

It seems lawmakers have taken notice of the increasing number of cases and are doing something about it. Last month leaders of the the Senate Finance Committee introduced a bill to improve the protection taxpayers have against fraudulent refunds that were claimed with stolen identities. This month the House passed a bill that was introduced by Debbie Wasserman Schultz. D-Fla,  with co-sponsors Lamar Smith, R-Texas, and Bob Goodlatte, R-Va, that would make tougher penalties for people that would try to steal tax returns through identity theft.

The intent of the bill is to make stealing the identity of someone less appealing. The bill would increase the maximum penalties for someone caught stealing an identity. It would also add to the definition of identity theft the use of a business or charitable organization to gain sensitive information from people, also known as “phishing”. Another point of the bill would be to have local law enforcement working in better coordination with Justice Department.

It is good to see that lawmakers are trying to put a stop to a growing problem with fraudulent returns and identity theft. As this crime is prevalent here in south Florida it is important to remember that as of right now this bill is not a law, so take care of your sensitive information and make sure to take it to a reputable person if you need help preparing and filing your taxes.

 

Resources:

Ftc.gov/idtheft

Ftc.gov/taxidtheft

 

 

Trusting Your Tax Preparer

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Every year many people become victims of tax related identity theft, a few of those cases are due to the tax preparer themselves altering the tax return for their own benefit. When it comes to preparing your taxes, it is easy enough to find someone to do it. Between January and April 15th you can generally find someone advertising their availability to prepare and file taxes around every corner, the problem that comes up is how credible is this preparer is.

 

Given the choice between someone that will prepare your taxes for $40 and someone that will do it for triple that amount, (with no other knowledge about the preparer) people will tend to go with the lower price in order to try to save money. This may work out well for you and you’ll get your refund and be on your way. But on the other hand it may end poorly resulting in missed out credits or even worse an audit.

 

 As a taxpayer you must remember you are paying someone to handle your sensitive information, date of birth, social security number, address, these are all pieces of information you are voluntarily giving to someone who is meant to take this information and keep it safe and secure.

One of the biggest red flags that you should notice when going to any tax preparer is whether or not they signed their name as the person preparing the return. Signing your name as the person that prepared the return means that you are accountable for what is on that document, that you are not trying to defraud the government. It is very easy for a tax preparer to leave the return as self-prepared, leaving the liability on the taxpayer rather than the preparer. There have been many incidents where a tax preparer is around for a season or two then suddenly vanishes. Should their clients get a notice from the IRS and the preparer is no where to be found the clients are left perplexed as to what happened when they need to speak before the IRS.

 

In the end you have many choices when it comes to getting your taxes done, always make sure to double check the information that is on the return, and find a credible preparer that will sign their name on the return and not disappear. It tends to be that you get what you pay for so the question is, how much value do you put on your information and your preparer.