By Iowa Congressman Tom Latham
Now that we find ourselves in the midst of tax season, it is crucial that Iowa taxpayers be vigilant in protecting themselves from predatory and costly scams that are timed to take advantage of honest taxpayers during an already stressful time of year. As is often the case, one of the first lines of defense is knowledge. Awareness of the red flags that could indicate a scammer or fraudulent scheme can mean the difference between becoming a victim and getting through tax season unscathed.
This week, the Internal Revenue Service (IRS) issued its annual “Dirty Dozen” tax scams, a list of scams that can threaten taxpayers at any point of the year and especially during the peak of tax filing season. Some scams are particularly common and costly, and they warrant special attention from Iowans.
The IRS reports that tax fraud through the use of identity theft is tops on its Dirty Dozen list this year, and it is easy to see why. According to a report from the General Accounting Office, the IRS identified almost 642,000 incidents of identity theft in tax administration between January and September 2012 alone, a significant increase from previous years. However, because that number does not represent the cases that go undetected, the problem is even more severe.
Although the IRS is taking steps to beef up its identity theft enforcement and protection services, it is vital for taxpayers to know key tips that can help shield them from a crime. Identity thieves can go to a variety of lengths to obtain personal information, including stealing a wallet or purse, posing as someone who needs information about you through a phone call or email, looking through your trash for documents, and accessing information you provide to an unsecured website.
Identity and financial thieves can also use phishing techniques, another item on the Dirty Dozen list, to obtain information. Phishing is typically carried out with an unsolicited email or fake website that poses as a legitimate site to trick potential victims into forking over valuable data.
When guarding against this, it is imperative to know that the IRS does not contact taxpayers by email or social media to request personal or financial information, nor does it use these communications channels to notify taxpayers of an audit or a refund. Additionally, Iowans should avoid scam emails claiming to be from the IRS and websites claiming to be from the IRS that do not begin with www.irs.gov. Instances of these should be forwarded to firstname.lastname@example.org. For more tips, visit www.irs.gov/uac/Identity-Protection-Tips.
Another rampant case of fraud involves promises of “free money.” Throughout the country, bogus flyers and advertisements have popped up in community churches suggesting that taxpayers can file returns with little information and receive tax credit or Social Security refunds. Such scams make fictitious claims — for instance, a promise of a tax refund or nonexistent stimulus payment based on the American Opportunity Tax Credit, even if the victim was not enrolled in or paying for college. Like it is for all gimmicky promotions during tax season, Iowans should be aware.
Scammers also oftentimes pose as charitable organizations and take advantage of the good hearts of Americans during natural disasters to solicit donations. The IRS offers these tips to avoid being lured in: donate to recognized charities; be wary of charities that use names or websites that sound or look like those of respected, legitimate organizations; don’t give out personal financial information to anyone who solicits a contribution; and don’t give or send cash as a gift, but use a check, credit card or another method that provides a receipt instead, so that any financial gift can be documented.
When it comes to defending against identity theft and financial fraud this time of year, knowledge truly is power. To learn more about the Dirty Dozen tax scams, visit www.irs.gov, and my office is available to answer any questions you may have toll free at 1-866-428-5642, or 202-225-5476. Also feel free to visit my website at latham.house.gov.