Tax Preparation

BBB helps Identification Theft Consciousness Week with tax preparation ideas

Published Monday, Jan. 31, 2022, 7:02 pm

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Irish taxes(© Michael Flippo – stock.adobe.com)

As we approach the W-2 forms postmark deadline, millions of Virginians will enter tax filing season. Filing your taxes comes with certain risks.

To support Federal Trade Commission’s (FTC) Identity Theft Awareness Week, January 31-February 4, 2022, BBB Serving Western Virginia (BBB) ​​offers the following tax preparation and identity theft prevention tips to reduce your chance of tax identity theft.

Each year, 7 to 10% of the US population become victims of identity fraud, and 21% of those are repeat victims. The Identity Theft Resource Center (ITRC) reports that individuals who have previously been affected by identity theft are at a greater risk for future identity theft and fraud. Almost one-third of those who reported identity theft to ITRC before are now dealing with it again.

With 118.6 million individuals have had their records exposed in data breaches during the first half of 2021, identity theft is a major concern as we enter into the tax filing season. According to identity verification company ID.me., taxpayers have lost over $200 billion to unemployment identity theft and COVID-19 relief fraud since March of 2020. In 2020, Virginia ranked thirty-sixth out of fifty states on reports of identity theft with a total of 15,632 reports.

Everyone with a Social Security number is at risk for identity theft, but two demographics get targeted more aggressively and frequently: the incredibly young and the old. Most identity thefts are crimes of opportunity. Thieves often target those who don’t regularly check for warning signs and those who are unlikely to report irregular activity on their credit reports. Yet, according to the FTC’s 2020 Sentinel Data Book, published in February 2021, the most victimized age group is 30- to 49-year-olds.

Children are targeted because thieves can use a child’s Social Security number to establish a fraudulent “clean slate.” One in 50 children are affected by child identity fraud, which costs US families nearly $1 billion each year. Identity theft experts recommend parents monitor their children’s credit reports as often as their own. Read FTC’s tips to protecting your child from identity theft.

Seniors are targeted most often over the telephone and through internet phishing scams. Some studies suggest that people become more trusting as they age, which explains why it’s more difficult for older adults to detect fraudsters.

Identity thieves can target the recently departed with information gleaned from public obituaries and access the deceased’s Social Security number through the Social Security Administration’s master files. Stealing a deceased person’s identity is commonly referred to as “ghosting.” Ghosting often goes unnoticed by surviving family members for months or years. More than 2.5 million identities of deceased individuals are stolen each year. The IRS offers ways to protect the deceased from identity theft.

Tax identity theft occurs when someone uses your Social Security number (SSN) to file a phony tax return and collect your refund. Victims may not find out it has happened until you try to file your real tax return and the IRS rejects it as a duplicate filing.

“As taxpayers, we should continue to protect our sensitive tax and financial data throughout the year to help protect us against identity thieves,” says Julie Wheeler, President and CEO of BBB Serving Western Virginia. “We can’t completely eliminate identity theft, but people who regularly monitor their accounts, bills, and credit reports can lower their risk,” says Wheeler.

Taxpayers may encounter IRS imposter scams any time during the year. Many of these schemes peak during filing season as people prepare their tax returns or hire tax professionals.

BBB tax identity theft avoidance tips

Complete your return as soon as you can. Scammers usually file almost so they can beat the real taxpayer and get a refund. The sooner you file, the less likely a scammer can be successful in filing a fake return in your name.

Avoid IRS imposters phone calls and email scams. Scammers manipulate taxpayers by pretending to be IRS agents. The IRS sends written communications first in every situation, so if you receive a call or email before an official letter, it’s a scam. If you do receive unsolicited contact that you believe is from the IRS, hang up and contact them directly at 1-800-829-1040 to verify legitimacy. Learn more at BBB.org/taxscams. Report tax phishing scams to phishing@irs.gov. Learn more at BBB.org/phishingscam.

Protect your privacy & shred documents. Take precautions on data privacy by understanding why you are being asked for your personal information and asking questions about why it is needed. Committing to good data privacy habits can help protect you from financial loss and a lengthy recovery. You should also protect your personal data, shred sensitive documents, guard your Social Security Number, and secure your tax records. Look for shredding events in your local community like BBB’s Secure Your ID Day on April 9, 2022, at Salem Civic Center from 8 – 11 AM.

Keep your computer up to date. Run software updates and virus checks regularly to keep your computer’s security up to date. Use strong passwords (BBB.org/passwords). Remember to periodically change your password throughout the year.

Beware of Employer W-2 phishing scams. Tax ID theft often occurs when a workplace’s payroll or Human Resources department falls victim by an email from a president or CEO. This is also known as a Business Email Compromise (BEC) scam. In this scheme, a fraudster pretends to be the “CEO” of a company and requests a list of employees and personal information (like SSNs, W-2s, etc.). The IRS “urges company payroll officials to double-check any executive-level or unusual requests” for this type of personal information.

Mail your tax return directly from the post office instead of your mail mailbox. Always send your return by certified mail with the return receipt requested.

Check your credit report at least once a year for free at annualcreditreport.com. Make sure no one has opened a new account in your name.

Research a tax preparer Thoroughly before you hand over personal information. Visit bbb.org for a list of credible local businesses in your area that can help.

BBB tips to help you find a tax preparer you can trust

A paid tax return preparer is primarily responsible for the overall, substantive accuracy of your tax return(s). If there is a problem with your return or you are audited by the Internal Revenue Service (IRS), the tax preparer can help you address the issue and can often represent you.

The preparer is required to sign your tax forms (paper or electronic) and provide their preparer tax identification number (PTIN), a number assigned by the IRS.

Get referrals. To find a tax preparer, start by asking friends and family for recommendations, then check BBB Business Profiles at bbb.org. Look beyond the letter grade; Complaint details and Customer Reviews will tell you about others’ experiences.

Make sure they are properly registered. A tax preparer must obtain a PTIN from the IRS. Never let someone work on your taxes unless they have this number. Don’t be afraid to ask about this or other qualifications; a capable professional does not mind questions.

Look for credentials. Anyone with a PTIN can prepare your tax forms for you, but some tax preparers have more training and qualifications than others. Enrolled agents, certified public accountants (CPAs), and attorneys have unlimited rights to represent their clients to the IRS on all matters. Other preparers can help you with forms and simple IRS matters but are limited otherwise, and they can’t help you if they didn’t prepare your form. Learn more about tax preparer credentials on the IRS website.

investigate. Examine whether the preparer has any questionable history with your state’s Board of Accountancy (for certified public accountants), the State Bar Association (for attorneys), or the IRS Office of Professional Responsibility (OPR) for enrolled agents.

Consider Accessibility. Many tax preparation services only set up shop for the months leading up to the tax filing deadline on April 18. In case the IRS finds errors, or in case of an audit, you might need to be able to contact your tax preparer throughout the year ; be sure to find out how you would do so.

Read the contract carefully. Read tax preparation service contracts closely to ensure you understand issues such as how much it is going to cost for the service, how the cost will be affected if preparation is more complicated and time-consuming than expected and whether the tax preparer will represent you in case of an audit.

Search for free tax programs. There are several free government programs that prepare taxes free of charge if you meet an income requirement; go to the IRS’s Free File page for more information. Visit Virginia Tax’s Free File service for more information at www.tax.virginia.gov/free-file.

Tax Software and Apps. If you plan to file yourself, use tax software or an app that provides both excellent data security and good customer service. Some of the top names in tax prep software are BBB Accredited Businesses, so check with bbb.org first.

If you are a victim of tax identity theft

If you are the victim of tax identity theft in the US, contact the IRS at 800-908-4490.

You should also file a report on BBB ScamTracker at BBB.org/scamtracker and the Federal Trade Commission (FTC) at ftc.gov/complaint or by calling 1-877-FTC-HELP. The FTC also offers a personalized identity theft recovery plan at identitytheft.gov.

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augusta free press

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