NEW YORK (MainStreet) — The 2015 tax season officially kicks off on today, according to the IRS, and while taxpayers are gathering proof of individual retirement account (IRA) contributions, documentation of charitable donations, receipts for business expenses, bank statements, W-2 and 1099 forms, scammers are gearing up as well.
"The year may be brand new, but scammers are up to their same old tricks," said Gerardo Cardenas, communications manager with AARP.
The IRS paid some $5.2 billion in fraudulent identity theft refunds last year and prevented $24.2 billion in fraud based on what it could detect, according to the Government Accountability Office (GAO).
Ongoing scams include rigging caller identification information to appear as if the IRS is calling and sometimes even follow-up calls claiming to be the police or the Department of Motor Vehicles.
“Two common ways that identity thieves gain access to confidential information is that they contact people by phone claiming to be an IRS agent requesting personal information in order to send the person a refund,” said Janice Krueger, a subject matter expert with Greatland Corporation, a company that specializes in W-2 and 1099s. “There are also emails that are sent to people claiming to be the IRS.”
A government advisory program has created new tactics for the 2015 tax season that aim to prevent identity theft. These new measures include Tax Identification Number (TIN) truncation and less transparent W-2 forms.
“TIN truncation allows for printing either X’s or *’s in the first five digits of a recipient’s ID,” Krueger told MainStreet.
IDs that can be truncated are Social Security Numbers (SSNs), Individual Taxpayer Identification Numbers (ITINs), Adoption Taxpayer Identification Numbers (ATINs) and Employer Identification Numbers (EINs). Originally, EINs were not allowed to be truncated because SSNs and EINs were nine digits, which caused problems processing electronic data. Since there was no indication as to the type of ID, a software program had to err on the side of caution and not disguise the number in case it was an EIN.
“Now that EINs can be truncated, more IDs will be truncated, which hopefully will reduce identity theft since the thief will not have a complete ID,” said Krueger.
In 2015, there are also new W-2 forms that make it impossible to see a Social Security number through the envelope window without opening it. “Traditional mail is one of the main sources of identity theft during tax season and is one of the IRS’ biggest concern so they are continually looking for ways to protect taxpayers’ secure information,” Krueger said.
In response to the rising incidents of identity theft, the IRS implemented an Identity Protection PIN (IP PIN), which is a unique six-digit number that is assigned annually to victims of ID theft for use when filing their federal tax return that shows a particular taxpayer is the rightful filer of the return.
The number of IP PINs has nearly doubled from last year.
“The IRS will not call you on the phone,” said AARP's Cardenas. “If they need to start a conversation with you, they will do it by official paper mail.”
-Written for MainStreet by Juliette Fairley