While the Tax Day deadlines may have passed, the threat of tax fraud is skyrocketing, especially with the advancements in AI technology leading to more sophisticated scams. Considering this, it’s never too late to safeguard yourself by implementing an Identity Protection Pin.
Why the Rise in Tax Fraud Scammers?
Last year, the IRS received 294,138 complaints of reported identity theft, the second most in its history. The most was 328,591 in 2021. Sadly, many victims only learn they’ve been scammed when they go to file their tax return and realize someone already did so in their name
Last year, over a million tax returns were flagged for possible identity theft, and the numbers aren’t looking to go down any time soon. Today’s scammers are getting more sophisticated in how they can efficiently steal someone’s identity, create a fake ID, and file a fraudulent tax return in the victim’s name. These criminals find a weak link in the system, aiming to gain access to personal tax and financial information.
To combat this rising threat, the IRS Criminal Investigation (CI), for instance, allocates 70% of its time and efforts to probing offenses related to tax fraud. These include questionable refund schemes, abusive tax practices, and fraudulent tax credits.
How Can an IP PIN Help?
As taxpayers, here are some steps that can protect you from falling victim to these tax scams.
Obtain an Identity Protection PIN (IP PIN): An IP PIN is a six-digit number assigned by the IRS. It prevents misuse of your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) on fraudulent federal income tax returns. The IP PIN is known only to you and the IRS.
By using an IP PIN, you ensure that only you, the legitimate filer, can submit tax returns using your SSN. It helps the IRS verify your identity when you file electronically or a paper tax returns and even if you don’t have a filing requirement, an IP PIN still safeguards your account.
How to Obtain an IP PIN
Use the online Get an IP PIN tool on the IRS website. HERE
If you don’t have an account on IRS.gov, register to validate your identity. The tool is generally available from mid-January through mid-November. Retrieve your IP PIN online each calendar year; a CP01A Notice will not be mailed.
To use your IP PIN, simply enter the six-digit IP PIN when prompted by your tax software or provide it to your trusted tax professional. You can use it on many IRS Forms such as: Forms 1040, 1040-NR, 1040-PR, 1040-SR, and 1040-SS. TIP: the IRS will never ask for your IP PIN via phone calls, emails, or texts.
In addition to securing your own IP PIN, we always recommend to choose a reputable tax professional. Avoid return preparers who promise unusually large refunds or base their fees on a percentage of your refund.
Always be cautious with unsolicited emails or text messages related to your tax return, especially those claiming to be from the IRS. Never click on suspicious links or open attachments. Report any suspected fraud to law enforcement. Be sure that your tax refund goes to a bank account. Don’t sign blank tax forms, and verify that your refund is deposited directly into your account rather than your tax preparer’s.
Have you been a victim to any of these tax refund scams? If not be aware of these threats:
Phishing emails asking you to verify information
Phone calls demanding tax payments
Filing a tax return under your name
Claiming your SSN has been suspended
“Ghost” tax preparers who steal your return
Receiving emails requesting additional tax forms
Fake IRS messages
Unemployment and stimulus frauds
Calls from tax agencies other than the IRS
Someone claiming you have an overdue payment
Offer in Compromise (OIC) scams
Demanding tax payments in gift cards
Imposters requesting a W-8BEN form
A Trusted Advisor
In the ever-evolving landscape of tax fraud, vigilance is our greatest ally. By staying informed and adopting preventive measures, we can shield ourselves from falling prey to these terrible crimes. Jeanine Hemingway CPA is your trusted advisor in navigating the complexities of tax planning and safeguarding your financial well-being. With personalized guidance and a deep understanding of tax intricacies, Jeanine Hemingway CPA is here to help you outsmart the scammers and ensure the integrity of our tax system.