This is a lucrative time of the year for scammers.
As taxpayers collect their W-2s and 1099s, tax scammers are hard at work.
But according to recent data from the IRS, tax scams may not be as lucrative as they were before.
The IRS reports there was a 40 percent decline in tax-related identity theft in 2017 compared to the year before.
The agency said it stopped $6 billion in fraudulent tax refund attempts, and the number of tax returns with confirmed identity theft was down 32 percent.
And in New Jersey, more than 71,000 fake tax refunds worth $108 million were stopped for the 2016 tax year, according to the state’s Division of Taxation.
That’s all good news, but don’t let the numbers comfort you.
Taxpayers still need to be on guard, ready to protect themselves — and their identities — from creative and convincing scammers.
Let’s brush up on most common tax scams.
TAX REFUND FRAUD
Tax refund fraud is simple.
A scammer who has your personal information files a tax return in your name. Of course, the scammer says he is due a refund.
If the fake return is filed before your real one is, the refund will be paid out, and you’ll be left with a mess.
You might think you can’t be a victim, but you’re wrong.
We’ve lived through a couple of years of significant data breaches and hacks, so you really have no idea how much of your personal information could be in a thief’s hands.
The best way to protect yourself is to file your return as early as possible so you can beat the scammer to it. Even if you owe money, you should file quickly. Your payment to the IRS isn’t due until the tax filing deadline.
SCAMMING YOUR TAX PREPARER
Con artists are now targeting tax professionals, attempting to get their clients’ personal information.
In some cases, scammers impersonate the IRS, emailing tax preparers with instructions to click on a link to update information for IRS e-services. Others send phishing emails, armed with malware, to the tax pros.
They want to swipe client information so they can file fake returns and cash in on undeserved refunds.
Have a conversation with your tax preparer to make sure steps are taken to keep your information safe.
TARGETING YOUR BOSS
There’s been a host of scams targeting employers, human resources workers and payroll service providers.
Scammers, using email, will impersonate a company executive or someone from a department that may legitimately need private employee data, such as copies of W-2 forms.
They basically trick company reps to hand over all the information needed to file a fake tax return in your name.
Make sure your employer is aware of the scam, and ask that he spread the news around to employees who handle sensitive information.
YOU OWE THE IRS
This one’s an oldie, but it’s still a money-maker for scammers.
Your phone rings, and the caller identifies himself as an IRS or law enforcement agent. You’re in trouble, the caller says, explaining there’s a warrant for your arrest, and unless you pay your back taxes immediately, you’ll be taken to jail.
Some scammers ask that you wire money, while others ask for prepaid cards or iTunes gift cards.
Under most circumstances, the real IRS will never contact you by phone. (Learn more about the exceptions here.) If the agency wants to reach you, it usually sends a paper letter first.
If you’re not sure, hang up and call the IRS directly to see if there’s a problem.
NEW TAX LAW, NEW SCAMS
We expect we will hear about the next batch of scams.
With the passage of the new tax law, fraudsters will get creative and find ways to convince taxpayers they owe money.
They did it after the Affordable Care Act was passed and there was some confusion over Obamacare-related tax reporting.
You can be sure to hear some new ones soon.
To stay safe, never open emails or click on links from questionable senders and don’t answer the phone if an unknown caller rings.
And let us know what new scam attempts come your way.