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How to protect yourself from income tax fraud

On Behalf of | Jan 1, 2016 | Tax Law

Many people in Toledo are looking forward to getting their income tax refund. Some see this check issued by the IRS as a sort of “bonus,” though in fact it was their money all along. But what happens when the check never arrives?

It could be because the taxpayer has been the victim of income tax fraud. Similar to identity theft, income tax fraud is a scheme whereby a criminal uses another person’s name, date of birth and Social Security number to claim to be that person to the IRS. The criminal then files a tax return in the victim’s name.

Relying on that false claim, the IRS sends the refund to the criminal, depriving the taxpayer of his or her rightful funds. A news article on the topic says this scam costs victims “billions of dollars a year.”

Victims may not learn what has happened until the IRS rejects their return because it was “already filed,” when the refund never arrives, or when suspicious activity pops up on their credit report. Ways to avoid getting scammed this way include:

  • File early. As early as possible, such as when you get your W-2 paperwork. This year, the first day the IRS began accepting 2015 returns was Jan. 19.
  • File electronically. Filing this way allows you to get your refund earlier, and via direct deposit.
  • Protect your identity. For instance, avoid carrying your Social Security card around with you, and use caution when disclosing your number. Don’t do it if the business or person asking for it seems suspicious.
  • Ignore “phone calls” from the IRS. The IRS never calls taxpayers about back taxes. Anyone who calls claiming to be from the IRS and demanding immediate payment is a con artist.

Nobody wants to be scammed, just like nobody wants to have to deal with an IRS audit or an alleged unpaid tax bill. But if the latter happens, an experienced tax attorney can help you.