Tax season is in full swing.January 29th marked the first day that electronic tax returns were accepted by the Internal Revenue Service.
This year alone, 155 million returns are expected to be filed. As a result of the immensity of this number, tax fraud is anticipated and heavily weighing on the minds of both consumers and financial institutions. Keep reading to learn how to protect your financial assets and avoid common tax time issues.
â€œThe income tax created more criminals than any other single act of governmentâ€¦.â€ â€“ Barry Goldwater
Combatting Tax Refund Fraud
In 2010, there was an immense upsurge of tax refund fraud.
CNBC predicted this type of fraud to hit at least $21 billion in the year of 2016. Not only does tax refund fraud cost consumers, it cost banks and other financial institutions.
As a result of the extraordinary expenses associated with this type of fraud, many new initiatives were put into place in the year of 2017 to combat the fraud in the year of 2017.
These include â€“ but, are not limited to â€“ the following:
- The sharing of various types of data from filed tax returns
- The sharing of information from the tax returns of businesses
- The creation of a new tax refund program that connects each of the states and the financial industry
- The expansion of the verification code associated with the Form W-2
- The enhancement of password requirements for software programs that are used by both tax professionals and individual tax payers
â€œFraudsters see tax refund fraud as a means to easy money. The best defense is a good offenseâ€¦.â€ â€“ Michelle Florez, Bankerâ€™s Toolbox
Common Tax Season Scams
There are several scams that commonly occur during tax season. The most common includes emails that seemingly appear to be from the IRS.
These are designed to trick taxpayers into revealing personal information, such as their Social Security information, addresses, and so on.
Then, there are some that attempt to gain information through phone calls, claiming that the individual owes the Internal Revenue Service. Many consumers are encouraged to wire money or load onto prepaid cards. If one informs the scammer that they will not engage in their activities, the criminal will often threaten legal steps, such as arrest.
To protect yourself, you should never give out personal information to anyone, through any means, regardless of how convincing that they sound.
For more information on tax refund frauds, visit the Tax Scams Consumer Alerts section of the IRS website by clicking here: https://www.irs.gov/newsroom/tax-scams-consumer-alerts
Tax Preparation and Refunds
In order to protect yourself from tax season fraud, carefully select your tax preparer. It is best to opt for tax preparation services offered through your bank or through a well-known tax preparation service provider.
You will be required to provide a vast amount of personal information. In the wrong hands or the hands of one that lacks organization and has no regard to the sensitivity of the information, it could result in immense problems.