Tax Scams—Identity Theft, Phone Scams—We Are All Targets
Originally published in the Michigan Business Law Journal:
The IRS released pursuant to IR-2014-1, its annual “Dirty Dozen” list of tax scams. As we head quickly into another tax season, we should all be vigilant for ourselves and our clients of the ever-expanding con artists using the tax system to prey on the unsuspecting.
We all probably know someone who has had their identity stolen if, in fact, not ourselves. Identity theft can take many forms. The basic stolen credit card number (often caught by your credit card company very quickly) to much more pervasive identity theft, including cleaning out bank accounts, opening credit card accounts, and use of your identity for various transactions. The recent well-publicized data security breaches at major retailers have put consumers at risk as we become ever more “connected” and cashless. The 2013 Federal Reserve Payment Study issued by the Federal Reserve Bank of San Francisco found payments are increasingly card based and cash, while in volume is still dominant; in value cash only represents 14 percent of dollar volume.
Tax Return Filing
Imagine now that you or your client dutifully files a tax return electronically (again, paperless) only to get an e-mail back that the tax return was rejected because a tax return was already filed under that social security number. The panic sets in immediately. How do you file a tax return? Are you in trouble? What else have the thieves done? Indeed, one identity theft will prevent the filing of a joint income tax return leaving the other spouse in limbo. Does he/she file a separate tax return to avoid penalties; can you amend later? April 15 or October 15 are when many of these incidents will be uncovered.
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