The tax season is starting late this year due to the government shutdown, which gives taxpayers more time to prepare their taxes. It is beneficial to file taxes early for many reasons. Not only do you avoid the last-minute rush, but you also minimize chances of becoming a victim of tax fraud.
Tax fraud is widespread. It includes many kinds of crimes, including identity theft, fraud by tax preparers, and impersonation of charitable organizations. It is important for taxpayers to recognize, avoid, and report tax fraud. Cheat Sheet shares the startling figures about tax fraud: “Tax refund fraud alone affects millions of people every year and costs the government billions of dollars. In 2011, fraudsters stole more than $3 billion from the government via an estimated 1.1 million false returns.
“In that same year, the IRS blocked more than 12 million false refund claims worth more than $40 billion. For some context, that’s more money than Goldman Sachs raked in last year. Without the 3,000 or so investigators and enforcers at the IRS and many more spread across the U.S., financial gangsters would be committing so much fraud it would make even the most callous Wall Street fat cat blush.
“The IRS has provided anecdotes about some notable cases from the past year. Among them is the self-proclaimed ‘First Lady’ of tax fraud, who is estimated to have defrauded the government for $2.2 million and was arrested in July. In another instance, an identity fraud ring filed returns worth about $3.7 million.
“The IRS reports that it has flagged potentially fraudulent returns worth $1.3 billion for fiscal 2013. Thanks to increased enforcement, the amount of fraud being caught should go up while the amount successfully being committed goes down.”
The IRS issues warnings to taxpayers against attempts of tax fraud during the tax season. This is the time when tax scammers are the most active. They use various methods of communicating with taxpayers, including sending fake emails, text messages, letters, and calling over the phone. Keeping your financial and personal information safe involves not sharing it with unverified sources online and offline. It is best to file taxes as early as possible and be free from the threats posed by identity thieves.
If you fall victim to identity theft, you must immediately report it to the IRS. This video will show you how you should act if you believe your tax information has been stolen. Reporting will help the IRS to block any fraudulent tax returns that the identity thief may file using your tax information.
Stay safe from tax fraud this season by preparing your tax returns on time and filing early.