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IRS warns taxpayers of scammers and identity theft

on April 13, 2015

With the April 15 tax deadline looming, the Federal Trade Commission’s Tax Identity Theft Awareness program has a stark warning for taxpayers: “Protect personal information at home like you would cash or jewelry.”

Tax identity theft is the largest category of identity theft cases in the country. Most common criminal activities include filing a fraudulent tax return using another person’s Social Security number, claiming someone else’s children as dependents, claiming a tax refund using a deceased taxpayer’s information, and earning wages under another person’s Social Security number.

FTC’s recent statistics show that almost a third of identity theft complaints involved taxes or wages. Although the percentage of complaints concerning taxes and wages has consistently been going down for the last few years, FTC received more than 50,000 IRS imposter scam complaints last year—25 more times compared to the year before.

Moreover, the Treasury Inspector General for Tax Administration (TIGTA) reported receiving more than 200,000 complaints about IRS imposter scams and other forms of tax identity theft for last year. Victims lost about $11 million in total.

As recently as 2012, Oakland was on the map as one of 17 U.S. cities at high risk of tax identity theft, according to the Internal Revenue Service (IRS). But the FTC’s Washington office confirmed that Oakland and the Bay Area are no longer in the country’s top 20 problematic metropolitan areas.

Still, everyday mishaps such as simply losing wallets or smartphones can lead to tax identity theft. Common cases, according to FTC, include theft by family and friends, stolen mail or tax returns, unsolicited calls asking for personal information, and purchase of such vital kinds of information from corrupt insiders within banks, hospitals, prisons, schools and government offices.

With the move to online transactions, protection of personal information has become fragile. Avenues to widen identity robbery include data breaches and hacking, using insecure Wi-Fi hotspots, file sharing, downloading software from unknown sources, and even innocent interactions in social networking

A new twist to this criminal trend includes scammers posing as the IRS. Increasingly aggressive scammers call or e-mail people telling them that they owe taxes, demanding immediate payment, and further threatening to arrest people or deport immigrants. In the course of such calls, they may ask for or claim they already know one’s Social Security number.

FTC reminds consumers that if IRS needs to reach out to people, they first send regular mail, and do not place phone calls asking for personal information. They warn people who got their Social Security number lost or stolen, or experienced unusual delay in receiving tax refunds might become possible tax identity theft victims.

Keeping personal information private, and maintaining a backup system for such information, are vital steps to reduce risk of tax identity theft.

With the tax filing due coming up, taxpayers are advised to either send tax returns directly from the post office or use a secure network when filing electronically. For older Americans, additional cautions include securing Medicare card numbers, and making sure that care facilities’ implement good data protection policies.

People who fear they may have been victimized should contact the IRS Identity Protection Specialized Unit at 800-908-4490 (8 a.m. to 8 p.m., local time).

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