Jun 07, 2023 Last Updated 01:53 AM EDT

Personal Finance

7 Preventive Ways from Being a Tax Scam Victim

Nov 20, 2015 05:45 AM EST

Tax-related identity theft is common nowadays. It happens when a person uses someone's client's stolen social security number to file a tax return claiming a fake refund.  The thieves may also create false Forms W-2 to support refund fraud schemes by using a stolen EIN from your business client.

According to CNN Money, the IRS, state tax agencies, and tax preparation companies are doing their best to protect your personal data and thwart criminals from stealing it.

In a press conference held on Thursday, representatives from leading tax software revealed that a slew of new data and filing pattern information will be shared by tax preparation firms with the IRS and state tax agencies to control the number of thwart criminals from using someone's identity to steal refunds.  

Furthermore, few changes on the front-end of the process are made in tax software. Users will notice a requirement for stronger passwords, more security questions, new lockout features if you spend too long trying to log in or attempt to do so too many times, plus stronger verification features, such as sending the tax filer an email or text with a log-in PIN.

However, IRS Commissioner John Koskinen explained that people also have to take steps to prevent their personal information from stealing and announced a public campaign called Taxes. Security. Together. He said, "We all have a part to play,"

There are seven recommendations to avoid being a tax scam victim.

First, don't consider calls, emails or texts purporting to be from a tax agency as they are fake. Federal and state tax authorities will never contact and threaten you this way to ask your bank account or money.

Second, install security software that provides anti-virus and firewall protections.  Any attachments sent along with the emails pretending to be from tax or financial institutions could infect your system and steal login information.

Third, an active duty alert adds an extra layer of protection to the credit records of service members while they are deployed, as reported by Consumer Information.

Fourth, if you're concerned about identity theft, data breaches, or someone gaining access to your credit report without your permission, you might consider placing a credit freeze on your report.

Fifth, store your financial papers and personal documents stored safely in case of an emergency.

Sixth, since the stealer may try defrauding the IRS by nonsense arguments or interpretations of tax law or code, the taxpayer is asked to send in Form 843 (tax abatement) or claim that it's illegal to pay income taxes. The introduction of such code by any federal agency is totally unenviable and unanticipated as the source of their budget or salary is collected through income taxes, as mentioned by Money-Zine.

Lastly, report tax fraud activity to the IRS, using IRS Form 3949-A, Information Referral.  A completed form needs to be mailed to Internal Revenue Service, Fresno, CA 93888.

By following these simple yet wise precautions, victimization from tax scam can be avoided.

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