Once again, it is time to deal with taxes. For some of us, that means trying to file as quickly as we can and get that refund in hand and book a 7 day Mexican Riviera Cruise for spring break. For others, it means putting things off until the very last minute to avoid having to pay that shortfall.
Back in reality, I would encourage those with a refund to save it rather than spend it; perhaps knock down a lingering debt instead. We can also discuss your withholding for 2016 and try to lower that next refund by putting more money in your bank each week instead.
Whether we are refund receivers, or shortfall payers, either way we need to be wary of dreaded tax scams. Yesterday, the IRS posted Dirty Dozen #1: Identity theft tops the list. From the article, “Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund.” Personally, I had one client in 2015 with this exact issue.
This client patiently waited until late March to file their joint tax return. Upon electronic filing with the IRS, the client was alarmed when the filing was rejected because a tax return has already been submitted in their name. Somehow, their personal information had been compromised and fraud ensued. When this happens, the only solution is to send in paper returns, and join the people on hold with the IRS trying to undo the damage. It can take several months, hours of calls, and pages of faxes to correct this kind of fraud.
The IRS claims that in the past 3 years, they have assisted in convicting over 2,000 identity thieves. Just last year, they initiated 776 investigations resulting in 774 sentencing. While that is a fantastic figure, it is also frightening.
Do not let yourself become a statistic. Guard your private data, and only give out your Social Security number to those you absolutely have to. Beware of email and phone scams. The IRS is never going to call you and ask for a payment. You will get letters. I cannot tell you how many clients have called in a panic when they received that phone call saying “a warrant is being issued for your arrest unless you make a payment right now.” If it feels wrong, it is likely wrong – question everything.
If you believe you have been a victim, contact my office and I can help you work through the process of cleaning up your records. If you are getting ready to file your 2016 taxes, please give my office a call and let us help you. I provide tax preparation services for many personal and business clients.