With a 400 percent surge in reported phone and email phishing and malware schemes this tax season, the American Institute of CPAs is working with Congress, the Internal Revenue Service and its members to combat tax-related identity theft and tax return fraud.
AICPA tax experts Cari Weston and Melanie Lauridsen explained Wednesday during a press conference call what taxpayers can do to protect themselves from these schemes.
“ID theft is rampant,” said Lauridsen. “Fortunately, many of our members call us to tell us what they’re encountering, so we hear of these scams on a daily basis. We hear of phone scams threatening to arrest people, sue them, break down their door, or just levy their bank accounts if they don’t provide their personal information.” A recent scam targeted doctors and dentists. “It became so widespread that the Secret Service became involved,” she said. “They weren’t just targeting specific doctors and dentists, but also their clients. Sadly, we could go on with a long list of what we hear from our members.”
The AICPA works with the IRS both on a formal and informal basis to help its members, Lauridsen indicated. “There’s no silver bullet to prevent ID theft,” she said. “Thieves are targeting many different groups. They can get away with it because they are behind the scene, unlike bank robbery.”
Weston emphasized how critical it is for taxpayers to be diligent about whom they share tax information with.
“It’s a hugely important topic,” she said. “The public needs to take some responsibility.”
Taxpayers need to be extremely aware of who they do business with for their tax preparation, even if they prepare their own returns, Weston cautioned. “They should use a reputable software company. The general rule is to go with the bigger name companies rather than some of the newer startup companies,” she said. “And if the taxpayer hires a tax professional, they should not assume that they are all the same.”
Credentialed preparers can be checked on the IRS PTIN database. “But just because someone is in the database, you also need to do your own homework,” said Weston. Among the things she recommended are checking with the state accountancy board, doing an Internet search of the preparer using the search terms “complaints,” and checking with the Better Business Bureau.
“We are constantly providing resources to our members on how to keep data confidential, how to notify clients if there is a breach, and the things they need to do to follow up, because there’s a good chance it won’t stop with tax return theft,” said Weston.
The IRS issues IP PINs (Identity Protection Personal Information Numbers) to proven victims of tax return ID theft, and to residents of Florida, Georgia and the District of Columbia, which are high crime rate areas for refund fraud. An IP PIN helps the IRS verify a taxpayer’s identity and prevents someone else from filing the taxpayer’s return using their Social Security Number. The system to retrieve lost IP PINs was recently hacked, but this did not compromise the effectiveness of the IP PIN itself, according to Weston and Lauridsen.