Be Alert to Internet Tax Scams During Tax Season

“Experience is the name everyone gives to their mistakes.” — Oscar Wilde

Experience can be a good thing, but not when it comes to fraud. One mistake you don’t want to make is to fall victim to an Internet scam, as it could lead to the loss of money or even your identity. Cyber crimes are a widespread threat these days, but tax season presents some specific attempts to be wary of.

As surely as you are working hard to file your paperwork, Internet scam artists are working hard to defraud you by posing as the IRS. You should always be cautious about opening unsolicited e-mails, but it’s easy to overlook a scam at a time when you are also receiving legitimate messages about your taxes.

Common Internet tax scams
To help you discern the “real” e-mails from the phony, here are three common scams to watch for:

Underreported income. Claiming to originate with the IRS, these fraudulent e-mails allege that you have underreported income and that you can find out how much you owe by opening an attachment. But beware: doing this downloads a virus.

A virus attacks your computer and can attach itself to other programs on your system. Many e-mail viruses replicate themselves when you open the viral attachment or read the e-mail and then send themselves to your contacts, who think the message is from you. Viruses can cripple your computer; you don’t want to send them along to your friends and coworkers.

Refund. These communications promise quick and easy tax refunds—in exchange for your personal information and for details about your financial institution. It’s obvious that this type of information could allow a would-be criminal to pose as you and access your personal finances. If your social security number gets into the hands of the wrong person, that person can do serious damage to your credit, which can take years—or even a lifetime—to repair.

Making work pay. These messages refer to reduced payroll taxes for qualifying individuals through a provision of the 2009 government stimulus package. They ask for personal information so that the IRS can deposit money owed you into your bank account. In reality, the provision provides a tax credit for qualified individuals in the form of reduced withholding from their paycheck.

Like the Refund scam, the perpetrators here are fishing (or, rather, phishing) for your identifiable personal information to do things like open credit lines in your name and access your bank and investment accounts.

Tips to help you avoid becoming a victim

  1. The IRS never discusses official tax matters over the Internet. Forward any communication where the sender poses as the IRS via e-mail to phishing@irs.gov; then, delete the e-mail from your inbox.
  2. Don’t open attachments from unknown senders.
  3. Research a company or website before you submit personal information.
  4. Never give your social security number to an unknown source online.
  5. Visit the FBI website, www.fbi.gov/cyberinvest/escams.htm, to learn whether the type of e-mail you received is a common cyber scam. The site also offers tips for avoiding Internet scams.

Hopefully, this information will prevent you from falling prey to Internet scams during tax season and throughout the year. You can always discuss any suspicious communications you receive with a trusted financial professional or tax advisor before opening the door—or e-mail—to risk.

© 2010 Commonwealth Financial Network®

Commonwealth Financial Network

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