Approximately 1 in 18 Americans have their identities stolen each year. Among the many identity theft scams is an emerging hoax in which cyber criminals obtain remote control of computer systems to hack into sensitive employee information to steal identities. Thieves will then use a stolen social security number to file a tax return and claim a fraudulent refund. Criminals may also use stolen employer identification numbers to create false Forms W-2 to support refund schemes. This threat is particularly relevant to office settings, so be sure that you and your employees are using proper precautions at work to avoid being victimized.
Scammers use a variety of methods to enter computer systems, often through the use of malicious software, such as viruses, worms, Trojans, adware, spyware and ransomware. This threatening software has the potential to not only impact you, but your employees and business clients as well.
To protect yourself and your office from malicious software, all of your employees should have anti-virus software installed and maintained on their computer at all times. When selecting an anti-virus program, be sure to only install it from sources you trust. You may also want to consider placing certain IT restrictions on employees regarding what types of software they can install.
You’ll want to review any software that your employees use to remotely access your network and that your IT vendor uses to support your systems and remotely troubleshoot technical problems. Remote access software is a potential target for scammers to gain entry and take control of a device.
Each year, the IRS releases their “Dirty Dozen” list of the year’s most prevalent tax scams.
1. Identity Theft. These scams are especially prevalent during tax season. During the 2015 tax season, there was a significant rise in the number of identity theft cases. The IRS has taken major strides to protect taxpayers from the threat of identity theft during the upcoming tax season.
2. Telephone Scams. Callers impersonating IRS agents will contact victims and threaten them with police arrest, deportation, license revocation and more. Remember, the IRS will never initiate contact with a phone call.
3. Phishing. Phishing scams use unsolicited emails or fake websites made to appear legitimate but are intended to steal your personal information. Remember, the IRS will never send you an unexpected email about a bill or tax refund.
4. Return Preparer Fraud. Dishonest tax return preparers have been known to set up shop and steal personal information from their clients.
5. Inflated Refund Claims. Be cautious of any supposed tax return preparers promising a large refund. Do not use the services of anyone who asks you to sign a blank return, promises a big refund before looking at your tax records or changes fees based on a percentage of the refund.
6. Fake Charities. Groups have been known to masquerade as charitable organizations to attract donations from unsuspecting contributors.
7. Offshore Tax Avoidance: The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore. Taxpayers are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities.
8. Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation of falsely inflating deductions or expenses on their returns to under pay what they owe or possibly receive larger refunds. Think twice before overstating deductions such as charitable contributions and business expenses or improperly claiming such credits as the Earned Income Tax Credit or Child Tax Credit.
9. Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is generally limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit.
10. Falsifying Income to Claim Credits: Don’t invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers are sometimes talked into doing this by scam artists.
11. Abusive Tax Shelters: Don’t use abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true.
12. Frivolous Tax Arguments: Don’t use frivolous tax arguments in an effort to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims Even though they are wrong and have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes.