There's an important warning out today about a scary income tax return scam that could cost you big. And the clock is ticking in a race with hackers and identity thieves to file your legitimate tax return before the crooks file bogus returns with your personal information. But this year, the Internal Revenue Service is offering a new layer of protection that might help you avoid this tax return nightmare. Follow along and I'll explain.
In its simplest form, this scam happens when an identity thief files a false income tax return using your name and ID. But nearly everything about the return is bogus including a huge refund due to the scammer.
Problem is, all that fraudulent information gets added to your account. And that is just the beginning of your nightmare. Usually the IRS quickly processes the return and sends the refund to the bank account shown on the return. If that account just happens to be a pre-paid debit card, the receiver is untraceable and that leaves you holding the bag.
As if that's not bad enough, you won't even know you've been scammed until the IRS rejects your legitimate return, usually after the ID thief is long gone with a big fat refund. Anyone with experience dealing with the IRS can probably imagine the years-long ordeal of trying to straighten out the mess. Plus, don't forget that the IRS has the power to freeze your bank accounts and seize your wages until it all gets settled. So trust me, this is a very serious matter.
Now I realize lots of folks think that this only happens to someone else. They think it is so remote that it could ever happen to them. But think about this: Over the past couple of years, literally hundreds of millions of consumers have had their personal information leaked in high-profile hacks at Target, Home Depot and JPMorgan Chase bank, plus hundreds of smaller break-ins at fast food and other retailers across the country. Can you really be absolutely sure that your personal information wasn't compromised in any of these leaks?
>>> Has your identity already been stolen? Here are the 3 warning signs to check now.
So now you know the scam and the risks, but do you know what you can do right now to help protect your reputation with the IRS? This year, the IRS is offering a new program to help protect tax payers, but you have to know how to apply for it. Plus, I have a list of tips that will help lock down your tax account and keep the hackers from stealing your refund.