By Emily Crowe
CNJ staff writer
With tax season upon us, the Internal Revenue Service and other agencies are warning taxpayers about the potential for tax-return scams ranging from identity theft to refund fraud.
According to a report issued by the Treasury Inspector General for Tax Administration, 1.2 million people in 2012 were victims of tax identy theft and 1.6 million fell victim through the first six months of 2013.
That fraud was worth $3.6 billion in 2012, though the IRS managed to identify 1.8 million false tax returns that year that could have cost an additional $12 million.
Megan Palla, a certified public accountant in Clovis, said the most common type of tax scam she sees in the area is identity theft.
“As far as tax scams that we see here,” Palla said, “people steal their identity and along with that, they get their Social Security number and mailing address and file fradulent tax returns.”
Many times, taxpayers do not realize their identity has been stolen until they file a return for the current year. In that case, the IRS will send them a letter letting them know a return has already been filed on their behalf, Palla said.
“It takes some time to clear up, but the IRS has sadly become very familiar with it,” she said. “They have some procedures in place now to help taxpayers that have come across something like this.”
Palla recommends anyone who suspects their identity has been stolen, or even someone who has lost their wallet, contact the IRS immediately to let them know.
To avoid potential tax filing due to identity theft, Palla recommends having your credit checked once per year and being vigilant about communication with the IRS.
“The IRS never ever contacts you via email,” she said. “If you receive an email, it is a scam. They will contact most often by mail and very occasionally by phone.”
After the 2013 tax season, the IRS released its annual Dirty Dozen list of tax scams targeted at everyday taxpayers.
Some of the most common of the Dirty Dozen include:
• Phishing: Phishing is a scam typically carried out via unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information.
The IRS does not initiate contact with taxpayers by email to request personal or financial information.
• Return preparer fraud: With 60 percent of taxpayers using tax professionals to prepare their tax returns, users should be careful of who they choose.
Taxpayers are legally responsible for what’s on their tax return, even if it is prepared by someone else.
• “Free money” from the IRS: Flyers and advertisements suggesting taxpayers can file a tax return with little or no documentation are popping up, especially those that promise refunds to people with low income who normally don’t have a tax-filing requirement.
These scammers prey on low-income individuals, the elderly and members of church congregations with promises of free money that never comes to fruition.
• Impersonation of charitable organizations: Following major disasters, scammers impersonate charities to get money or private information from taxpayers.
The IRS recommends donating to recognized charities, not giving out personal financial information and not giving or sending cash.