How to Protect Yourself from Scams and Identity Theft During Tax Season.

Tax season is a busy time for taxpayers and tax professionals alike. However, it is also a prime period for scams and fraud related to tax identity theft. To avoid issues and protect your financial information, it is essential to be aware of potential threats and adopt effective security measures.

The Risk of Tax Identity Theft

Tax identity theft occurs when criminals use a taxpayer’s personal information to file a false return and claim fraudulent refunds. This type of fraud can cause significant disruptions, requiring time and effort to resolve the situation with the IRS (Internal Revenue Service).

Additionally, the increasing exposure of personal data on the internet, especially after major data breaches like the National Public Data leak, which compromised billions of records, further increases the risk of fraud.

Tips to Protect Your Tax Data

There are several strategies to minimize the chances of falling victim to scams during tax season. Below are some of the most important:

1. Choose a Trusted Advisor

More than half of taxpayers rely on a professional to prepare their tax return. However, it is crucial to choose a qualified and trustworthy service provider.

• Avoid professionals who do not sign the return or include a preparer tax identification number (PTIN).

• If you don’t know a preparer, use the official IRS directory to find certified tax preparers.

• Ensure the professional is affiliated with a recognized association or registered with the National Association of State Boards of Accountancy.

2. Use Secure Methods When Sending Information

When sharing tax documents and personal information, ensure that the transmission is secure.

• Prefer secure, encrypted platforms rather than sending documents via email. At ACE ADVISORS USA, we provide a secure platform for document exchange, contracts, and payments to minimize all existing risks.

• If a tax professional requests information without an additional layer of security, consider finding another provider.

3. File Your Return Early and Use an IRS PIN

Fraudsters often file false returns as quickly as possible using third-party SSNs. To minimize this risk:

• File your tax return as early as possible so that if a return has already been filed under your SSN, the fraudster cannot submit another return.

• Request an Identity Protection PIN from the IRS to add an extra layer of security when filing your return.

4. Beware of Fake IRS Emails and Text Messages

Scammers frequently send emails and text messages posing as the IRS, promising refunds or demanding immediate payments. Be cautious:

• The IRS only contacts taxpayers initially via official mail.

• The IRS will never ask for financial information via email or text message.

• If you receive a suspicious communication, do not click on links and verify authenticity through the official IRS website, or contact your advisor.

5. Don’t Fall for Promises of Huge Refunds or Tax Credits

Many scams involve false promises of large refunds or tax credits. Some red flags include:

• Pressure to provide personal information or pay upfront fees.

• Offers to claim benefits on your behalf in exchange for a portion of the refund.

• Professionals who refuse to sign the tax return they prepare.

6. Watch Out for Pandemic-Related Scams

Even today, criminals continue to use COVID-19-related scams to deceive taxpayers, claiming there are pending payments or available benefits. If you receive an email or message claiming you are entitled to a pandemic-related payment, be suspicious and forward the message to phishing@irs.gov.

Conclusion

With the growing digitalization and increase in tax-related scams, it is essential to take protective measures to prevent fraud and disruptions. Choosing trustworthy professionals, such as us at ACE ADVISORS USA, using secure methods to share information, and staying vigilant for suspicious communications are key steps to ensuring the security of your data and avoiding issues during tax season.

Staying informed and following best practices can make all the difference in protecting against tax-related fraud. If you have any doubts or suspect fraud, consult the official IRS channels for secure guidance.