Do you dread tax season? Well, for some people, tax season is the most wonderful time of the year. Scammers are constantly looking for ways to get their grimy hands in your pockets. And tax season is a popular time for them to strike. This is why it’s important for you to remain vigilant when it comes to protecting yourself from scams.
Tax fraud is big business. Tax refund fraud alone affects many people each year and costs the government millions of dollars. In 2016, banks stopped 108,539 suspicious refunds and returned them to the IRS. These suspicious returns totaled $239 million.
The IRS has provided anecdotes about some notable tax fraud cases. Among them is the self-proclaimed queen of tax scams, who is estimated to have defrauded the government for millions of dollars. In another instance, an identity fraud ring was sentenced in $24 million of fraudulent refund claims. However, thanks to increased enforcement, the amount of fraud being caught has increased. The IRS says the amount of new people reporting tax-related identity theft has fallen by more than 50%, with close to 275,000 fewer victims from 2015 to 2016.
Each year, the IRS reports a list of the top tax scams the public should be aware of. Many of these scams can result in a fraudulent return being filed on your behalf — or worse. Let’s take a quick look at 10 dirty tax scams to watch out for this year and what you can do to protect yourself.
1. Identity theft
“Identity theft occurs when someone uses your personal information, such as your name, Social Security number, or other identifying information, without your permission, to commit fraud or other crimes,” according to the IRS. “In many cases, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.”
Roughly $16 billion was stolen from 15.4 million Americans this past year, according to Javelin Strategy & Research’s 2017 Identity Fraud Study. Furthermore, over the past six years, identity thieves have stolen more than $107 billion.