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SALT LAKE CITY — As Tax Day approaches, the Internal Revenue Service warns taxpayers to beware of scammers involved in identity theft and other forms of tax fraud.
In fiscal-year 2013, the IRS initiated 1,492 criminal investigations related to ID theft — up 66 percent from the previous fiscal year. Indictments and prosecutions doubled during that same time period, with prison terms ranging from 38 months to 26 years.
The dramatic increase in investigations was attributed to a major rise in scammers working to steal identities in an even larger effort to steal money from people using more sophisticated means.
Virginia Keys, special agent with the IRS Criminal Investigation Division in Salt Lake City, said the pervasive use of social media has become a haven for criminals seeking to gain ready access to personal information and steal an individual’s identity.
“There are a lot of things that people don’t realize are things they should not be posting (online),” she said. “That includes private information, whether it’s a birthday with their name. It (allows) someone to Google and find out more about you, like where you live.”
Keys advises individuals to maintain privacy whenever possible. She also said to avoid carrying important documents such as Social Security cards or anything that includes a person's Social Security number or Individual Taxpayer Identification Number.
Keys also recommends having a credit check done annually and securing personal information in a lockbox or safe.
The IRS also advises to protect personal computers by using firewalls and anti-spam or virus software, updating security patches and changing passwords for Internet accounts regularly.
“Don’t give personal information over the phone,” Keys said.
If the thief is savvy enough, they can file false tax returns in your name or open false credit accounts. People need to be far more proactive in protecting their identity and not putting things on Facebook, Twitter or other social media that could be an issue.
–Virginia Keys, special agent with the IRS Criminal Investigation Division in Salt Lake City
Avoid doing so through the mail or on the Internet unless you have initiated the contact or you are sure you know whom you are dealing, she added.
“If the thief is savvy enough, they can file false tax returns in your name or open false credit accounts,” Keys said. “People need to be far more proactive in protecting their identity and not putting things on Facebook, Twitter or other social media that could be an issue.”
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IRS “Dirty Dozen” tax scams
• Identity theft: When someone uses personal information — such as a name, Social Security number or other identifying information — without permission to commit fraud or other crimes.
• Pervasive telephone scams: Schemes in which callers pretend to be from the IRS in hopes of stealing money or identities from victims.
• Phishing: A scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure potential victims and prompt them to provide valuable personal and financial information.
• False promises of “free money” from inflated refunds: Scam artists routinely pose as tax preparers during tax time, luring victims by promising large federal tax refunds or refunds they never dreamed they were due in the first place.
• Return preparer fraud: Some unscrupulous preparers prey on unsuspecting taxpayers in an attempt to conduct refund fraud or identity theft.
• Hiding income offshore: The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas.
• Impersonation of charitable organizations: Following major natural or man-made disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers.
• False income, expenses or exemptions: Another scam involves inflating or including income on a tax return that was never earned, either as wages or as self-employment income in order to maximize refundable credits.
• Frivolous arguments: Promoters encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe.
• Falsely claiming zero wages or using false 1099 Form: Filing a phony information return is an illegal way to lower the amount of taxes an individual owes.
• Abusive tax structures: According to the IRS, these schemes have evolved from simple structuring of abusive domestic and foreign trust arrangements into sophisticated strategies that take advantage of the financial secrecy laws of some foreign jurisdictions and the availability of credit or debit cards issued from offshore financial institutions.
• Misuse of trusts: Unscrupulous promoters continue to urge taxpayers to transfer large amounts of assets into trusts.
Source: Internal Revenue Service