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Regulation and Compliance > Federal Regulation > IRS

3 Ways to Guard Against Tax Fraud

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Tax season starts on Jan. 31, and scammers are ready to take advantage of consumers with taxes on their minds. On Jan. 23, the IRS released a list of ways for taxpayers to avoid getting taken advantage of by would-be tax fraudsters.

The IRS announced in January that it had assigned more than 3,000 employees to address identity theft issues and is training more than 35,000 employees who work with taxpayers to recognize signs of a scam and help people who fall victim to one.

Between 2011 and November 2013, the IRS stopped nearly 15 million suspicious returns and saved more than $50 billion in fraudulent returns, it says. For fiscal 2013, the agency launched almost 1,500 criminal investigations for identity theft, up 66% over fiscal 2012. Indictments and sentencing increased as well, doubling over fiscal year 2012, with the average prison term for those guilty of identity theft of 38 months, or just over three years.

Here are 3 things every taxpayer should do to guard against tax fraud:

Throw That Phish Back

Be wary of unexpected communications that claim to be from the IRS early in the tax season. While not clicking on links or opening attachments in email from unfamiliar senders is good advice in general, the IRS probably doesn’t qualify as unfamiliar, so remind clients to be cautious.

If your clients get an email that they believe is part of a phishing scam, they can forward it to [email protected].

Watch Your Phone and Facebook

The IRS said that it doesn’t use e-communication to request sensitive personal information from taxpayers. That includes email, text messages and social media.

If clients do receive a suspicious text message, they can forward it to the IRS at 202-552-1226.

Keep Your Passwords Locked Down

The IRS said that it doesn’t ask consumers for PIN numbers, passwords or other confidential information about credit cards or bank accounts. So, if a client gets an email that claims to be from the IRS and asks for, say, an account number to transfer a refund, it’s a pretty big red flag.

Speaking of passwords, remind your clients of how important it is to have strong ones. SplashData, a tech firm that offers password management software, recently released its list of the worst passwords of 2013. At No. 1 was “123456,” followed by “password.” Just a little more secure was “12345678” at No. 3 (and yes, “123456789” was also on the list at No. 6).

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