Tax advice to take to the bank

~ By Gerald Rome, Colorado Securities Commissioner ~

Gerald Rome, Colorado Securities Commissioner

Gerald Rome, Securities Commissioner

Oh boy, it’s that time of year again: tax season. But something is different these days. It is difficult enough to get your records together and get your return in on time. But over the last few years, we have been hit with an onslaught of tax-related fraud and identity theft. How very important it is for you to know what scams to look out for and be on guard against during this tax season. Paying taxes is one thing, but getting scammed is quite another. Here’s a sampling of some ideas on what to watch for this year:

1) Identity Theft.  This one is on the list every year for a reason. Tax-related identity theft occurs when personal or financial information is stolen from documents or data used to prepare taxes. Gains made in recent years by regulators have forced scammers to change tactics, so the fight against identity theft remains a moving target. In order to best protect yourself from this crime, remember that any sensitive information should be protected online via security software and firewalls, and physical data such as social security cards should never be out in the open – or even carried in your wallet – unless you are going to use them that day. Ensure that you are aware of security measures and protections utilized by your tax professional as well.

2) Phishing Scams.  It’s easy to think you wouldn’t fall for an IRS phishing scam, and yet millions of dollars are lost each year by normally reasonable, smart folks who just happened to be contacted at the right time or under the right circumstances to become victimized. The most popular phishing scam involves a person who claims to be an IRS agent contacting an unsuspecting target and demands payment of back taxes or a “tax bill.” Contact with victims is now being made through email as well. The most important thing to note is that the IRS will NEVER call or email you asking for money or personal information. If the person on the other line is threatening or intimidating, perhaps saying they have a warrant for your arrest, record the phone number, hang up, and call us or the Colorado Bureau of Investigation to report.

3) Return Preparer Fraud. This one is not meant to scare you away from decent and honest tax professionals. However, as in any profession, there are unscrupulous people who may seek to take advantage of the sensitive information provided to them for the purposes of doing your taxes, so it is always safe to be on guard. Some easy ways to help avoid problems with a tax professional? Ensure that he or she can provide a verifiable IRS Preparer Tax Identification Number (PTIN), ask about his or her qualifications, if using a CPA verify a license at, and always thoroughly review your tax return before signing. Also, be wary of the promises made by someone who is soliciting your business in this area. Promises of outlandishly high returns or of tax breaks a person wouldn’t normally get are red flags that you may have run across a bad apple.

This April 15, make sure that the information you provide is secure, and that your well-deserved refund makes its way into the right hands: yours! For questions about tax professionals, contact the Department of Regulatory Agencies at (800) 866-7675, and to report an attempted scam contact the Colorado Bureau of Investigation’s Identity Theft and Fraud Hotline at (855) 443-3489.

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