Nowadays, with the help of the Internet, it has become easier than ever to watch an HD-quality movie, book a ticket, order a meal, or say, file your tax returns. But despite the many pleasures the Internet provides, it turns out that not so many people know exactly how to use this technology safely, especially when it comes to protecting one’s identity. Read this article to learn how to avoid online tax fraud. Criminal tax lawyers from a premier New York law firm Joseph Potashnik and Associates explain how identity thieves can make use of your personal data to commit fraud over the Internet, how to file returns safely and what to do if you are charged with cyber tax fraud.
Online Tax Fraud
With the development of new technologies, not only law enforcement has more resources to detect and fight fraudulent activity, but also unscrupulous individuals have more ways to deceive others at their disposal. One of such ways is using the Internet to steal one’s identity.
A lot of people use some kind of software to calculate their taxes and then submit their income information via the Internet. The first threat you may encounter during this process is choosing software. It might turn out that the program you are using is actually a kind of malware that steals your personal information (name, social security number (SSN) and date of birth) and then transmits this data to a fraudster over the Internet. The malware might even change some of your personal computer software so that once you’ll attempt to access the Internal Revenue Service (IRS) website, you’ll be redirected to a similar-looking website and, instead of filing a return, reveal everything a criminal needs to know to steal money from you. The criminal may then use these details to file a return in your name and then try to claim a refund, essentially making you a fraud victim.
Another way you can be approached by scammers is by phishing text messages, email or even social media. Someone claiming to be an IRS agent or a representative of a legitimate tax preparation company, will try to talk you into giving them your personal data or issue a wire transfer as an advance payment for their services. The offender may also target businesses trying to obtain its employees personal information from an HR or finance department representative, sometimes using a compromised email account of someone from the company’s senior management.
As you see, the ways are many. Still, you can protect yourself against scammers. As experienced tax attorneys with a leading NYC law firm, we have dealt with multiple cases of online tax fraud, and based on our experience we suggest you follow these guidelines when preparing your returns.
Tips on How to Protect Your Identity
- Take your time to educate yourself. Browse the official website of the IRS (www.irs.gov) for guidelines on using tax prep software and efiling returns. Pay special attention to tips on avoiding tax-related identity theft.
- Never give out your SSN and other personal information to anyone except for established, trusted entities authorized to lawfully request such information from you. Their number is strictly limited and includes tax prep businesses, insurance companies, credit institutions, a few credit reporting agencies, investment advisors and some other companies whose services require notification to the IRS.
- Be wary when hiring a tax prep. You may use the IRS directory of returns preparers with credentials and qualifications to find a legitimate professional near you. Mind that if a tax prep is not on the list, it does not mean he or she is a not licensed.
- Don’t fall for promises of free services. If someone is offering you to prepare your returns for an unreasonably low fee or absolutely free of charge, stay alert as most surely it is fraud.
- Approach tax reduction cautiously. If someone offers you to help reduce your income tax payments, first ask advice from a licensed tax attorney.
- Ignore unsolicited emails or messages. The IRS doesn’t use these channels to communicate with taxpayers. And neither do licit tax prep companies. Be especially wary of emails with attachments – these may carry malicious software.
- Ask for recommendations. Before using any complementary software, ask someone you trust what software they use and what they can recommend.
- Ensure your online security. Set up spam filters for your email box. Keep your anti-virus protection up to date. When you’re filing or paying your taxes online, make sure you use an HTTPS-encrypted connection, that is, the URL at the link bar of the website should start with https. It means the connection is secure.
What to Do if You Have Become a Cyber Tax Fraud Victim
If despite all the precautions taken you have fallen victim of cyber tax fraud, there is still something you can do to try to get your money back.
You are most likely to learn that you’ve been defrauded only when you file a return yourself and then find out that a return associated with your SSN has already been submitted. In this case, the Internal Revenue Service recommends you to follow these guidelines:
- Visit identitytheft.gov to report fraud.
- Visit the official website of either Equifax or Experian or TransUnion to warn them your accounts may have been compromised. This will make it harder for the identity thief to open an account in your name.
- Contact banks and other financial organizations whose services may be accessed with the data stolen to check whether your accounts have been tampered with and to freeze them if necessary.
- Check all recent transactions.
- File a police report.
- If you’ve been approached by the IRS, start dealing with the issue as soon as possible. Consider contacting a tax fraud attorney for a confidential consultation before calling the agents.
The penalties for cyber tax fraud hardly differ from the more traditional type. However, in this case identity theft is often involved, which may make the final sentence for an indicted person twice as harsh. However, the tax system is far from being easy to make out, which makes it easy for anyone to commit fraud, be it a regular taxpayer or a licensed professional. Therefore, it is necessary to hire a skillful tax fraud lawyer who will be able to prepare a solid defense case. If you’re investigated or charged with related crimes in New York or New Jersey, contact us at Joseph Potashnik and Associates PC. We have a team of accomplished tax fraud attorneys specializing in criminal defense. Our law group was founded in 2006, and since then our tax fraud lawyers have gained unrivalled expertise in representing clients in initial IRS audits, IRS criminal investigations and prosecution on charges of tax fraud and evasion and related identity theft.