Beware: Tax season is scam season

Published: Tuesday, March 11 2014 12:00 a.m. MDT

Identity theft tops the list of scams at tax time, according to the IRS. Financial experts weigh in on how to avoid it.

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SALT LAKE CITY — It hurts individuals and families and it reaches its peak during tax season.

Identity theft tops the Internal Revenue Service's 2014 list of common scams taxpayers can encounter. And identity theft can lead to tax fraud, which uses a legitimate taxpayer's information to file a bogus tax return and claim a refund.

"It's certainly a growing problem here in Utah," said Scott Morrill, program manager for the Utah Attorney General's Office. "This year, I've received more calls about identity theft than I have in the past. For some reason, it seems to be escalating and getting worse."

Jason Broschinsky, a franchisee with Liberty Tax Service in Salt Lake City and an enrolled agent with the IRS, said he encounters instances of identity theft every year while preparing taxes for clients.

"We'll go to file someone's return, and we get an answer back from the IRS that this person has already filed a tax return, and they haven't," he said. "The thieves have gotten ahold of their Social Security number, name and date of birth, and the rest of what's on the tax return is made up."

Such forms of identity theft can have significant repercussions for taxpayers — a delayed refund, damaged credit and other problems that surface repeatedly years down the road.

In the past 36 months, 30 million people were victims of identity theft in the U.S., according to the Identity Theft Council, a non-profit group that works with communities and law enforcement across the country to combat the issue.

The group's executive director, Neal O'Farrell has been consulting governments and law enforcement on computer and financial security since the 1980s. In a video produced by the non-profit, O'Farrell said about 10,000 professional identity theft rings currently operate within the U.S.

Scammers are using a growing arsenal of techniques to obtain information from victims and make quick money at their expense. Some may call the victims, saying they owe money or are entitled to a larger refund. Others use phishing — unsolicited emails or fake websites that try to lure victims into giving up their Social Security number and other personal information.

Some thieves can find all they need in a mailbox.

O'Farrell quoted a thief who said, "To make matters even easier for us, you keep the mail at shoulder height so we don't even have to get out of our car. How nice of you. And when you put out mail to be collected, you put a red flag up that's like a flashing beacon that says, 'Important mail here. Please steal me.'"

Pay attention

Consumer apathy is what guarantees success for many thieves, O'Farrell said.

"When it comes to identity theft, consumers are like teenagers," he said. "They seem to have a sense of invincibility that, 'It won't happen to me, and if it does, I'll ride through it.' Any criminal enterprise will take advantage of that."

Charlie Roberts, spokesman for the Utah Tax Commission, says scammers often target the elderly or people who are not fluent in English.

"The elderly and those that are just learning the English language seem to be more trusting than others, and those are probably the two most vulnerable populations," he said. "It's good to reach out to family members to keep their dukes up and protect their identities."

Morrill says once scammers have a person's Social Security number, they can apply for employment, obtain loans and set up credit accounts because most companies don't check the number against the name it's assigned to.

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