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Regulation and Compliance > Federal Regulation > IRS

IRS Warns Taxpayers, Pros to Beware of Identity Theft

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The Internal Revenue Service can’t say it often enough: Tax-related identity theft remains a serious problem, especially during tax season.

Although instances of this scam have dropped sharply in recent years, bad guys are still out there using someone’s stolen Social Security number or individual taxpayer identification number to file a fraudulent tax return claiming a refund, according to the agency.

“The IRS and the Security Summit partners in the states and the private sector have joined forces to improve our defenses against tax-related identity theft, sharply reducing the number of victims,” IRS commissioner Charles Rettig said in a statement.

“But we encourage taxpayers to continue to be on the lookout for identity theft schemes, including email phishing attempts and other tax scams.”

(Related: Legendary Ex-Fraudster Frank Abagnale Says Cybercrime Will Turn Deadly)

Tax-related identity theft is one of a “dirty dozen” nefarious activities the IRS warns taxpayers to be alert to every year.

The agency noted in the statement that it began working together with the states and the private-sector tax industry in 2015 as the Security Summit to fight tax-related identity theft. The partners enacted several safeguards that it said were showing good results.

These safeguards include expanded information sharing among the Summit partners and more robust internal IRS controls to guard against fraudulent tax returns.

The Security Summit has worked to increase awareness about tax-related identity theft and security steps through its “Taxes. Security. Together.” and “Protect Your Clients; Protect Yourself” campaigns.

The IRS cautioned taxpayers that identity thieves are always on the lookout for a scheme that works. Once a ruse begins to fail as taxpayers become aware of the ploy, they change tactics.

Nor are business filers immune to being scammed. According to the IRS, cybercriminals also file fraudulent Forms 1120, U.S. Corporate Income Tax Return to steal business identities.

The Summit partners offered the following security tips for taxpayers and tax professionals.

Always use security software with firewall and antivirus protections. Ensure that security software is turned on and can automatically update. Encrypt sensitive files stored on the computer, and use strong passwords.

Learn to recognize and avoid phishing emails and threatening phone calls and texts from persons purporting to be banks, credit card companies and government organizations, including the IRS. Do not click on links or download attachments from unknown or suspicious emails. Invest in good anti-spyware and anti-malware software protection.

Treat personal information like cash; don’t leave it lying around. Do not routinely carry a Social Security card, and make sure tax records are secure.

— Check out Top 10 Tax Facts for Individual Clients in 2019 You Need to Know on ThinkAdvisor.


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