Guest Blogger: Lolly Ward, LMW Personal Financial Services
Tax fraud is a growing concern for seniors, who are often targeted by scammers looking to steal personal information and hard-earned savings. As a daily money manager, I have seen firsthand how fraudsters prey on retirees through phone calls, emails and even fake IRS notices. Protecting yourself or older loved ones requires vigilance, education and a few simple steps to safeguard your financial and personal information.
Recognizing Tax Scams
The first step in avoiding tax fraud is recognizing the most common scams. Here are some common tactics:
1. Phone Scams: Fraudsters posing as IRS agents may call and claim you owe back taxes. They use threats of arrest or lawsuits to pressure you into making an immediate payment. The IRS never demands payment over the phone or threatens legal action. Never give your social security number or other personal information to anyone over the phone who calls you unsolicited.
2. Phishing Emails and Texts: Scammers send fake emails or texts that appear to be from the IRS, often containing links to malicious websites that steal your personal information. The IRS will never initiate contact through email, text messages or social media. Also, never send documents with your Social Security number or financial information via email without password encryption as hackers can steal that information from your email. Never email your login credentials or passwords in an email.
3. Fake Refunds and Stimulus Payments: Some scammers promise fake refunds or government payments to trick you into providing bank account details. Be wary of unexpected offers of money or links to websites providing this service.
4. Tax Preparer Fraud: Dishonest tax preparers may file false returns on your behalf or steal your refund. Always use a trusted, credentialed professional.
Protecting Yourself from Tax Fraud
There are several proactive steps you can take to keep your tax information safe:
1. Keep Personal Information Secure: Never share your Social Security number unless necessary. Use strong, unique passwords for online tax accounts and all other online accounts.
2. File Taxes Early: Filing your tax return early reduces the chances of someone else filing a fraudulent return in your name. Use electronic filing with direct deposit to minimize the risk of paper fraud. You can pay any estimated taxes or taxes due via https://www.irs.gov/payments/direct-pay-with-bank-account to avoid writing physical checks that can get lost in the mail.
3. Verify Tax Preparers and Online Services: Use only certified tax professionals, such as CPAs or enrolled agents. Avoid tax preparers who promise guaranteed refunds or charge fees based on refund amounts. If filing online, ensure the website is IRS-approved and uses secure encryption.
4. Beware of Suspicious Communications: If you receive a phone call claiming to be from the IRS, hang up immediately. The IRS will not call you. They always send their communication via mail. Do not click on links or download attachments from unsolicited emails claiming to be from the IRS. If in doubt, contact the IRS directly at1-800-829-1040 to verify any tax-related inquiry.
5. Monitor Your Financial and Tax Records: Check your bank and credit card statements regularly for unusual transactions. Generally, you have 60 days from your last bank statement to file a report. It varies by bank, but it’s best to call your bank and submit your fraud claim in writing as soon as you notice it to minimize your liability. The Fair Credit Billing Act (FCBA) limits consumer liability for credit card fraud to $50 in most cases regardless of when you report, but the sooner you flag fraudulent credit card transactions, the faster you get your money back.
6. Consider signing up for Identity Protection PINs (IP PINs) through the IRS: The IRS IP PIN is a 6-digit number assigned to eligible taxpayers to help prevent the misuse of their Social Security number (SSN) on fraudulent federal income tax returns. A new IP PIN will be generated each year.
What to Do If You Are a Victim of Tax Fraud
If you suspect tax-related identity theft, act quickly:
- Report it to the IRS by filing Form 14039 (Identity Theft Affidavit).
- Contact your bank and credit bureaus to place a fraud alert on your accounts.
- Monitor your credit report for any suspicious activity.
Tax fraud is a real threat, but with awareness and proactive steps, seniors can protect themselves from scams. Stay informed, be skeptical of unexpected IRS-related communications, and always verify before acting. If managing finances feels overwhelming, engage a trusted family member, advisor, or daily money manager to provide guidance and help in filing your taxes and keeping up with your financial affairs.
Contact LMW Personal Financial Services at 404-388-7511 or online.
