Identity theft is already a serious problem. Combine it with tax season, and it's a disaster.
Last week was a holiday, although you probably didn’t know it. No one got time off for Tax Identity Theft Awareness Week, but it was still important.
So why am I writing about it a day after it’s over? Because I believe such “awareness weeks” suffer a fatal flaw: Their topics are crucial, but after one week, everyone moves onto the next one. I’m not ready to let this one go.
With Tax Day fast approaching, identity thieves are working as hard as accountants — this is the busiest time of year for both professions. How big is the problem? In July 2013, the Federal Trade Commission says it received just 94 complaints of what it calls “IRS impostor scams.” By last November, that number peaked at 8,293.
It skyrocketed for one simple reason: The scams worked. According to TIME magazine, ID thieves succeeded in stealing $5.2 billion.
Here’s how to avoid contributing to that total…
1. Realize how the IRS works
When the IRS wants to reach you, the agency doesn’t make unsolicited phone calls. It doesn’t send unsolicited email. The IRS is old-school — it only mails you paper to your home.
If you owe the IRS money, the agency is flexible — payment options include credit cards and direct withdrawals from your bank account. The IRS does not demand a prepaid debit card or a money transfer. ID thieves loves those two options because they can take the money and run.
2. Realize how the thieves work
Tax ID thieves have gotten quite sophisticated. You might get a call, and your caller ID will actually say it’s the IRS. Not only that, the caller might give a phony badge number but know the real last four digits of your Social Security number.
The caller will urge you to pay immediately to avoid further penalties or get arrested. Needless to say, the IRS doesn’t make phone calls threatening to drag you off in handcuffs in the next few hours. The caller will insist you wire them the cash or put it on a prepaid debit card. If you do so, your money is gone.
3. What to do if it happens to you
If you receive a suspicious email, you can forward it to email@example.com.
If you’ve received a suspicious phone call, hang up and make a call of your own — to the IRS. Dial 1-800-829-1040 to verify the agency didn’t try to reach you. The FTC also suggests you file a complaint at ftc.gov/complaint or 877-FTC-HELP, and then notify friends and family of the scam attempt. They may be targeted next.
If you’re a victim of this pernicious identity theft, report it immediately. Call the IRS Protection Specialized Unit at 1-800-908-4490. The IRS is serious about the problem. They’ve assigned “more than 3,000 IRS employees to work on identity theft-related issues,” the agency says.
Finally, if you want to learn more about identity theft protection in general, check out How to Prevent Identity Theft.
Howard Dvorkin is a CPA and chairman of Debt.com, an educational resource for those who want to conquer all forms of debt in their lives.