Fake Tax Return Scam

It’s that time of the year, when scammers try to find a way to separate you from your money.

The Scam:

If a scammer gets your Social Security number and employment information, they might try to file a fake return on your behalf, before you file your legitimate return. The scammer will probably claim a large number of tax deductions or credits, even if you don’t actually qualify for them, to artificially inflate the tax refund. Then they will request that the refund be direct deposited to their bank account instead of yours.

This type of scam usually goes undetected until you try to file your legitimate tax return, only to have your return rejected by the IRS, stating that you’ve already filed one for the year.

PIN Protection:

I wrote about this scam last year, and I mentioned the benefits of the IRS Identity Protection PIN. The IRS PIN is a 6 digit code that is filed with your tax return. If a scammer tries to file a fake return, but they don’t have the PIN, the return will be rejected.

Unfortunately, last year you had to be the victim of identity theft or a resident of just a couple of pilot states before you could apply for the IRS PIN. I am happy to announce that the IRS is now allowing residents of several states to voluntarily opt-in to the IRS PIN program.

To be eligible for 2020, you must have filed a 2019 return as a resident of one of these 20 states:

Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Texas or Washington.

You can request an IRS PIN here:

https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin

Social Engineering vs. Old School Theft

So how would a scammer get your social security number, employer information, and other personal details?

The old way is through “old school theft” such as taking mail out of your mailbox before you’ve had a chance to retrieve it.

The new way is through “social engineering” – the art of exploiting human psychology, rather than theft or hacking, so people give up confidential information.

Perhaps you receive an e-mail from a friend that seems legitimate, but maybe the e-mail address is one character off. For example, you have a good friend with the address AllisonJones@gmail.com and you get an e-mail from AlisonJones@gmail.com. Most people might not notice that the first name had two “L”s in Allison versus a single “L” in the fake e-mail address.

Another form of social engineering is what is known as Pretexting.

Pretexting is where scammers focus on creating a good pretext, or a fabricated scenario, that they use to try to steal their victims’ personal information.

For example, perhaps you join a Facebook group for new mothers. Everyone is posting photos of their babies, and perhaps you share a few direct messages with some members or a period of months or even years. At some point one of your Facebook “friends” tells you that they have been evicted and are moving to a new apartment, but they can’t secure the apartment without a character reference and they ask if you can help them. Of course you say yes, because after all it’s only a reference, they aren’t asking for rent money. You complete the character reference form and send it back. The form asks some simple questions, such as how you know the person, if you think they have good character etc, and then they ask for your name, address, employer, and social security number.

Most people think “this could never happen to me”, but many Pretexting scams are set up months or years in advance. That’s the idea. You might be communicating with someone for a couple of years before they attempt to get your information, which is what makes us less likely to suspect these “friends” as compared to a brand new unsolicited request.

You can read more about Social Engineering here:

https://www.webroot.com/us/en/resources/tips-articles/what-is-social-engineering

About the author

William B. Burns, Jr. CFP® is a CERTIFIED FINANCIAL PLANNER professional and President of Burns Matteson Capital Management, a Financial Planning and Investment Advisory Firm with clients in 21 states throughout the US. He helps high-net-worth families reduce the worry and anxiety sometimes associated with wealth, allowing families to reclaim that time to reinvest back into their family, social, and professional relationships. www.BurnsMatteson.com