Follow this advice from a cybersecurity expert to help protect yourself and your clients.
As tax-filing season kicks off, it’s important to be on the lookout for tax scams. For the past few years, the Internal Revenue Service (IRS) has issued a Dirty Dozen list of tax scams. In 2018, the list included phishing, fake charities, and return preparer fraud. The Equifax and Marriott data breaches may also lead to an uptick in tax fraud this season. Here are some ways you can protect yourself and your clients. We encourage you to share these tips as appropriate.
1. File as Early as Possible
Even though tax returns are not due until April 15, we recommend filing client tax returns as soon as possible to get ahead of potential fraudulent filings submitted on your behalf. Traditionally, tax advisors wait to file close to the deadline if a payment is due, but it may behoove you and your clients to file early, regardless of whether there is a payment due, to help prevent fraudsters from filing before your client does with a fake return.
2. Be Vigilant About Suspicious Emails, Phone Calls, and Text Messages
Email scams may claim to be from the IRS or others in the tax industry, including tax software companies. These emails may ask the recipient to update or provide important information via a link to a website that appears to be an official IRS website but is actually fake. In addition, some of these websites may contain malware. The IRS urges anyone who believes they may have received a fraudulent tax email not to click any links in the email and to forward the email to
Tax scams that happen via a call or text often have common characteristics that you can look out for to identify a fake, including:
- Fake names and IRS badge numbers. Look out for common names and surnames.
- Scammers may know the last four digits of your Social Security number.
- The IRS toll-free telephone number can be spoofed on caller ID.
- Telephone scammers may follow up with an email containing a link to a fraudulent website that is often malware-infected.
- Background noise that sounds like a call center.
- Scammers may threaten victims with jail time or driver’s license revocation, then hang up and call back claiming to be the local police or DMV while also spoofing the numbers of these departments on caller ID.
- Foreign language use and claims that the call is from a foreign embassy investigating tax nonpayment.
For more information, see the IRS’ resources on identity theft prevention and detection. Let your clients know how they should expect to hear from you and how to confirm that it is you or your firm that is trying to obtain information from them. Advise them that if they aren’t positive if it is you or your firm, they should call back to the number you’ve provided them, so they can be positive of identity.
3. Verify Schedule K-1 and W-2 Form Requests
We urge caution when responding to requests from purported clients, spouses, or family members of clients and employees (both your own and employees of businesses owned by clients) for K-1 or W-2 forms or copies of filed taxes, as these requests may be fraudulent. Be sure to password-encrypt K-1, W-2, 1099 and copies of tax documents when sending them via email and do not distribute the password via email. We recommend that you use password-protected portals for transferring such documents.
4. Use a Shredder
“Dumpster diving” is more common than 1nost believe. We strongly recommend that you use a modern, crosscut shredder to dispose of sensitive documents that contain personal data, including any disposed of tax forms.
5. Validate Charities
Advise your clients that fraudulent charities have become common, and attackers use breached email boxes to send support requests for these charities to victims. Before providing a credit card or payment to a charity, validate whether the charity is legitimate
6. Raise Awareness
Share this information with clients, staff, and colleagues. Knowledge is the best weapon against scammers. If you or someone you know has been the victim of identity theft or a fraudulent wire transaction, reach out to your local police department and/ or the FBI for assistance.
Raj Bakhru, CISSP, is a partner at ACA Aponix, the cybersecurity and IT risk division of ACA Compliance Group.
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