Tax season is underway, and that means your tax refund-and your identity-are in play for identity thieves out to make easy money.
Tax identity theft is a fast-growing crime, impacting more than 260,000 victims a year and costing the IRS more than $3 billion in fraudulent tax refunds. In 2016 alone, the IRS reported a 400 percent surge in phishing and malware incidents related to the crime.
"Tax refund fraud is a reality for a whole lot of Americans," said Adam Levin, chairman and founder of CyberScout™, formerly IDT911. "It is caused by the tidal wave of useable data that has been or soon will be stolen by hackers."
Taxpayers can protect themselves by learning how to spot some of the most common scams criminals use to steal valuable personally identifiable information. Here's a quick breakdown of scams:
- Fake Bill. Scammers send victims a notice saying they owe taxes related to the Affordable Care Act. This scam may arrive by email, as an attachment, or snail mail.
- The Bogus Tax. Scammers demand payment for non-existent taxes, such as a "federal student tax," which asks college students to send payment via MoneyGram™ wire transfer.
- Verification scams try to entice victims to confirm the last four digits of their Social Security number by clicking on a link provided via email.
- CEO scams. Scammers impersonate executives and send emails to human resources and payroll departments asking for employees' sensitive financial and personal data. The emails can be very convincing, using the name of the company and CEO, for example.
It's important for taxpayers to remember that the IRS first contacts people with a letter in the mail if there is an issue with tax payment. The agency will never initiate contact through email or social media. Nor will it ever demand immediate payment of taxes or make threats to involve local police for not paying.
Follow these five tips to protect yourself:
- File Early. The IRS flags a second return as suspicious, so file early, before the bad guys.
- Go electronic. Opt for direct deposit of tax refunds to avoid lost or stolen refund checks.
- Choose tax preparers carefully. Avoid unscrupulous companies that steal personal data.
- Keep sensitive tax data secure on a password-protected or encrypted external drive and store in a secure location.
- Report scams to email@example.com.
Take action now before identity theft strikes. As an Armed Forces Insurance member, you already receive proactive identity management services from CyberScout™.