This year over 3,000 reports of fraud related to tax preparation have been recorded by the Federal Trade Commission. Overall Americans lost 8.8 billion dollars to fraud in 2022, and as many as one in ten adults may be the victim of fraud this year.
A key strategy scammers will often use successfully is impersonating people or organizations you may know and trust, including the IRS or other financial institutions.
Unfortunately protecting yourself from fraud is increasingly difficult, as technology and AI can be exploited to make fraud harder to detect until it is too late, so what can you do to protect yourself?
Here are some best practices for protecting yourself from fraud, tax-related, and beyond.
Fraud Prevention Basics
Never email sensitive documents that contain your social security number, name, and other private information. All transfers of documents containing sensitive information should only be completed using a secure online portal.
Never click on links in emails from unknown contacts. This is not just true of emails, but extends to texts and direct messages on social media. For example, when someone you are Facebook friends with but have not talked to in forever randomly sends you link with a mysterious title like “have you seen this video?” they probably are not trying to reconnect, it is pretty likely they have been hacked.
Check email addresses from unknown senders, any irregularities including one letter out of place, is a huge red flag. For example, say you receive an email from accountspayablee@amazon.com, while this looks like a normal email, the extra e at the end of payable is a dead giveaway that this is someone trying to impersonate Amazon. The presence of logos or other official-looking formatting in the email does not matter.
Again, this does not just apply to emails, be wary of text messages with links or requesting personal information. Most organizations will not text you randomly. Text alerts and requested two-factor authentication codes are common, but the IRS is probably not texting you about a tax return. Even if you receive a message and find it credible, rather than clicking any links in the message, check your email or use your web browser to go to the official site of the entity you believe is trying to contact you.
Come up with a passphrase or word for close family and friends that you can use to verify identity over the phone before sharing personal or banking information. This is likely something you will not need most of the time, but new technology is making it easier than ever for scammers to get your information over the phone by impersonating someone you know or have a close relationship with, so it is best to be prepared.
Use two-factor authentication, requiring a validation code sent to your phone or email during login, whenever possible. You can also take it a step further and use a two factor authentication app like duo.
Remember to update passwords regularly. Also, follow best practices for passwords and use something with multiple letters, caps and no caps, special characters and numbers, and longer than 10 digits at least. Do not use the same password in multiple places. Here is what Google support has to say on password best practices.
Fraud Prevention and Taxes
When finding tax professionals to work with, thoroughly vet them online and ideally meet via video or in person before signing contracts or providing them with any of your personal information.
The IRS has an online tool where you can get an Identity Protection Pin, a 6-digit number known only by you and the IRS, to prevent someone else from filing a tax return using your social security number or individual taxpayer identification number. Learn more and get an IP pin here.
The IRS recently discontinued most unexpected in-person visits, so be wary of anyone knocking at your door claiming to be with the IRS.
Remember, anyone can be fooled when they are not on their guard. Identity theft, and imposter scams are the two most common kinds of fraud, and both frequently prey on your sense of security.
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