The Easy Tax Refund Scam That Cost the US Billions in 2014

Every year, a tax refund scam like this accounts for billions of dollars in losses.

Tax refund scamIn 2014, identity theft topped the annual IRS list of tax refund scams. That year, identity theft affected over 17 million people and cost a whopping $15.4 billion. Although not all identity theft prompted the loss of tax refunds, tax-related crimes constituted a large percentage of total identity theft incidents that year.

Tax-based identity theft scams have continued to plague honest taxpayers in recent years. Victims lost not only refunds but suffered compromised security and a variety of other problems as well. Awareness is crucial in the fight against IRS scammers. The more you know, the less likely you are to fall victim to a common, yet easily preventable tax scam.

How Do Tax Refund Scams Work?

Despite recent advancements in technology, the most prominent tax scam is also one of the most simple: identity theft. The scammer simply obtains access to the victim’s Social Security Number or other identifying information. Methods for obtaining this information vary. Many scammers call victims under the guise of the IRS and trick them into giving up their information. Others send professional-looking emails in hopes of fooling unsuspecting recipients.

They don’t need to access a lot of information; according to one report, tax refund scammers merely require a Social Security number and their date of birth. Scammers can easily operate without even knowing the victim’s name.

Scammers use the personal information they obtain to file the victim’s tax return and steal his or her promised refund. Information gathered through tax refund scams can help scammers conduct other seemingly unrelated scams.

It doesn’t take long before the nefarious uses of the social security number and other personal information start to affect a person’s credit report. Unraveling the scams and taking your life back is a process that can take years.

Preventing Tax Scams

Tax refund scamAs in all walks of life, an ounce of tax scam prevention is worth a pound of cure. Avoid the grief and inconvenience by watching for the warning signs of IRS scams. Do not speak with any purported IRS representative who contacts you over the phone or via email. Be extremely cautious when giving out your Social Security information, date of birth, or other personal information. The right tax provider can help you keep your information secure.

If you suspect a scammer has stolen your identity, contact the IRS as soon as possible. Feel free to check out the IRS identity protection page or call the IRS Identity Protection Specialized Unit at 800-908-4490.

Tax-related identity theft is an even greater risk now than it was in 2014. Learning how to protect yourself from tax scams is more important than ever. Contact Incompass today at (916) 974-939 to learn how you can avoid common tax scams.

Categories: SCAMS & SCHEMES.