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Mar 05, 2020 Brittani Johnson

Helping to Protect Your Customers from Tax Fraud is Easy

Estimated Reading Time: 4 Minutes

Tax procrastination is real, and it’s something identity thieves depend on to rake in mass numbers of fraudulent returns each year. The Internal Revenue Service (IRS) says about one in five tax filers waits until the last two weeks before the filing deadline to file, and one in seven waits until the very last week. According to the personal finance site Wallet Hub, there’s a lot consumers would rather do than file their taxes: over half would rather serve jury duty, nearly a quarter would prefer to get an IRS tattoo, and 15% would opt for a six-month vow of silence. Sounds extreme, but it demonstrates the widespread aversion to tax filing.

And while consumers continue to stall, many don’t realize they’re only increasing the chances that their return is sent to a fraudster instead. Fortunately, the IRS has been taking aggressive steps to help reduce tax fraud, after years of seeing the numbers spike at an alarming rate. Some of these safeguards are invisible to consumers, while many others are designed to better authenticate the taxpayer’s identity and the authenticity of the return. These changes include:

  • Better communication amongst the IRS, state revenue departments, and the private-sector tax industry leaders to better enforce security measures that help protect taxpayers’ information;

  • New password protections for private-sector tax software accountants;

  • Certain states’ requirement of driver’s license number verification before releasing refunds;

  • Pre-refund filters for the tax software industry used to identify potentially fraudulent returns; and

  • Continued expansion of the IRS’ partnership with financial institutions to identify and stop fraudulent refunds.

In fact, the number of reported tax fraud victims in 2018 was down 19% from 2017 and 71% lower than in 2015, according the IRS. To put this into perspective, this equated to 199,000 tax identity theft incidents in 2018 versus 677,000 dealt with in 2015. Additionally, back in 2015, many tax fraud victims were forced to wait up to 8 months to get their refund; today, the delay is a couple of months, but this can vary depending on the case. The downward trend is likely to continue; however, just as we can always be certain that there will be taxes, there will also always be tax fraud and scams – both of which are well underway at this point. But that doesn’t mean there aren’t measures your customers can take to increase the odds that their refund will make it into their bank account, and not an imposters’.

Here are some tips to hopefully stay fraud-free this tax season:

  • File now if you haven’t done so already.

    The best way to prevent a fraudster from stealing your return is to reduce the window of opportunity. While this may not stop fraudulent activity from occurring, the IRS processes returns on a first-come, first-served basis, so the earlier you file, the better.
  • Use a reputable accountant or tax-filing software.

    Not only does using an accountant or online filing services reduce your chances for errors, leveraging filing support can help you file more securely.
  • Sign up for Scam Alerts from the FTC 

    to stay abreast of all the dirty tricks scammers are currently using. Identity thieves can pose as your employer, payroll companies, or the IRS itself. Often the requests will seem unnecessarily urgent, threaten penalties, and direct you to visit a fake website to enter information or download an attachment that contains malicious software.
  • Never send emails with personally identifiable information (PII) included.

    It’s best to never send this type of data through email at all, but if you must, you can encrypt your message by making a change in your email’s security settings (often found in Options > Security Settings).
  • Beware of online scams.

    These can come via email or as popups on your computer asking for your personal information. The IRS saw an approximate 60% surge in phishing and malware incidents in the 2018 tax season.
  • Never provide any personal information over the phone

    to someone who says they are from the IRS. The IRS will never contact you via phone, email, or social media. If you’re unsure, verify any communication by calling them directly to confirm.
  • Monitor your tax return status using the IRS’ online tool.

    You will be able to see if someone has filed a return before you and can act more quickly.

Tax season and its inherent risks are just another reason why identity protection is so crucial in today’s day and age. If you’ve thought about offering a solution to your valued customers to better protect them from the relentless onslaught of scams, breaches, and fraud attempts, you’ve come to the right place. Generali Global Assistance (GGA) provides comprehensive identity protection plans that can help detect if your customers’ sensitive information is already on the black market – a key factor that raises their risk of tax fraud – along with a team of resolution experts available 24/7 should they find themselves in the scary situation of being a tax fraud victim. Request a demo to learn more about the many benefits offering an identity protection service can bring you and your customers.

Published by Brittani Johnson March 5, 2020