In light of the recent Microsoft outage that affected banks, airlines, state offices, and other mission-critical organizations in July 2024, many Americans are pondering our collective reliance on technology. Along with our need for these systems to run without interruption come other concerns, such as the importance of data security. How safe our personal information is in the hands of various companies and the federal government?
While the Microsoft outage did not result in a data breach, other breaches have happened in recent years. Many of these breaches begin in places we trust with our data: financial institutions, credit bureaus, and even the Internal Revenue Service.
The Story of “Leaky Littlejohn”
Between late 2023 and early 2024, an IRS contractor named Charles Edward Littlejohn was sentenced to five years in prison as the party responsible for an IRS data leak. He pled guilty to the charges in October 2023, following a criminal investigation by the Treasury Inspector General for Tax Administration (TIGTA).
In a news release, the IRS explained that the data leak occurred between 2018 and 2020 and Littlejohn then released the information, including taxpayer identification numbers and other personal data, to news organizations.
In the news release, the IRS stated, “[W]e have not seen any indication that this taxpayer information was used in any way for identity theft or any related type of fraud.”
However, whether your information has appeared on the dark web (a part of the Web not indexed by search engines and only accessible through an anonymous browser), in the IRS leak, or in any number of other data breaches that have occurred in recent decades, it’s important to understand what this means and how to protect yourself.
What’s In a Number?
Your tax identification number can be your social security number, your individual taxpayer ID number or, in the case of business owners, your employer identification number. It is a unique, nine-digit number that identifies you to educational institutions, the three U.S. credit bureaus, the IRS, employers and more.
You use this number to open a bank account, apply for credit, apply to college, apply for a job, and for many other purposes. Once a scammer has access to this number, they can do any of these things under your name, including applying for loans or credit cards.
Fraudulent Tax Returns: One Common IRS Tax Scam
Criminals can also use your tax ID number to file fraudulent tax returns in your name and gain access to a tax refund. Fraudulent tax returns are just one of the many tax scams criminals use to separate you from your hard -earned money.
It’s a good idea to file your tax returns as soon as possible, rather than waiting until April 15. If you file in February, you don’t give scammers as much opportunity to file a return in your name. Even if you file early, you have until Tax Day to pay your bill. Filing early can give you more time to seek tax debt relief assistance and avoid penalties and late fees.
Understanding Other Common IRS Tax Scams
Fraudulent tax returns are just one scam a criminal uses to take advantage of hard-working Americans. Other IRS tax scams involve impersonating IRS officials by phone, email or text. Scammers may try to get you to reveal your personal information or even pressure you to make payments.
If this occurs, report the email or text to the IRS immediately. Hang up the phone, or ignore the text, social media message, or email. Do not click any links in an email or message.
If someone calls and says you owe taxes, you can always check your balance online at IRS.gov to see if you owe taxes.
Scammers may also send fraudulent letters in the mail that look like they are from the IRS. Again, check your balance owed online. If the letter you received looks like an IRS form, search the title and form number at IRS.gov to see if it is legitimate.
Tax Scam Red Flags
Security experts generally agree that a small dose of common sense goes a long way in avoiding scams. The IRS typically will not:
- Reach out via text (SMS) or a messenger program
- Request payment in the form of gift cards, crypto, or peer-to-peer payment platforms like Zelle
- Pressure that they will arrest you or take legal action
The IRS must follow due process and will notify you of unpaid taxes or unfiled returns through the mail before calling.
Ways to Protect Your Personal Data
It’s important to be proactive in protecting yourself against IRS tax scams and other forms of fraud. Make sure to shred any personal documents rather than throwing them in the trash. Even in today’s digital age, scammers often sift through discarded mail for account numbers and Social Security numbers.
Always use strong passwords. A password manager can help. Enable multifactor authentication when you can. You might even consider using biometric security, such as fingerprint or face ID, to login to accounts on your smartphone.
Take caution accessing public WiFi networks. Don’t log in to financial accounts or make purchases on e-commerce sites through an unsecured network.
While you can’t avoid sharing your personal information with organizations like the IRS or your bank, take care. If a service provider needs your Social Security Number, find out why. Ask if they can use an alternate means of identification. Don’t be shy asking about their security processes and how they store your data.
An Ounce of Prevention
While it’s difficult to avoid sharing your personal information, especially when organizations like the IRS or credit card companies use this as your primary means of identification, you can stay vigilant in other ways. Set up fraud alerts with your bank and check your credit report from the three major credit bureaus at least once a year. If your data has been involved in a breach, you might consider freezing your credit reports, which will prevent anyone from opening an account or taking out a loan in your name.
If you are receiving collections letters from the IRS and you owe back taxes, reach out to Alleviate Tax for help.
FAQs
What are the current IRS scams?
Scammers may file tax returns with your name and tax identification number in order to collect a tax refund before you file. Scammers might call, text or email you pressuring you to make a tax payment to avoid arrest. Scammers might also make “phishing” phone calls trying to obtain your personal information.
How does the IRS contact you about taxes?
The IRS will initially contact you by mail. An IRS representative will not call you without first sending a written bill in the mail. Sometimes, IRS letters arrive by certified mail.
What are the phone numbers for IRS scams?
If you feel you’ve been the victim of a scam or fraud, or if someone has contacted you impersonating the IRS, report it to the Treasury Inspector General for Tax Administration at 800-366-4484. You can also report emails to [email protected].
