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Examiner
  • Ron Finke: Take care and avoid identity theft

  •  Since your mailbox has been full of Forms 1099, W-2’s and other kinds of numerical and alphabetical soups, I want to bring to your attention a new form of scam involving your income tax filing. I first heard about this a few months ago from the gentleman informing the professionals in attendance about the Taxpayer Advocate Service within the IRS.

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  •  Since your mailbox has been full of Forms 1099, W-2’s and other kinds of numerical and alphabetical soups, I want to bring to your attention a new form of scam involving your income tax filing. I first heard about this a few months ago from the gentleman informing the professionals in attendance about the Taxpayer Advocate Service within the IRS.
    But first, I digress. The Taxpayer Advocate Service actually works! A charitable organization to which I belong was recently informed it had committed a regulatory transgression. Because of this, the IRS computer spit out a usual and customary bill for several thousand dollars and a promise to drain the organization’ s bank account unless the full amount was immediately paid.
    The members involved called two numbers, one on the notice and one to the Kansas City office of the Taxpayer Advocate Service. I am pleased to report that one nice lady in the not-for-profit section of the IRS processed a method of forgiveness for the transgression while another nice lady in the advocate section has communicated with us at several points to assure us that the wheels of equitable justice are grinding faster than usual in the right direction. Is this a great country or what?
    Now for the not-so-great scam. Most of us are filing our tax returns by e-file as the IRS desires because of its ease and speed. Most of those benefits accrue to the IRS rather than us. Also it is easier to steal your tax identity online. Thus, tax fraud has become the third largest theft of federal funds after Medicare/Medicaid and unemployment insurance. Jay Starkman, CPA, shared this in his contribution in The Wall Street Journal on Jan. 14.
    With your Social Security number and your name, the criminal can create your 2013 Form 1040 before you can turn around twice, file it using all sorts of false information, change your address on it, and collect a nice fat false refund. The IRS will transmit a refund almost instantly, even to an impossible-to-trace Visa or MasterCard purchased at a pharmacy. Imagine your surprise when the IRS sends you a notice that you already filed and received your gigantic refund! And it often takes months to prove you didn’t file it.
    Is this something to be concerned about? There were 51,700 cases in 2008, more than 1.1 million in 2011, with a potential of more than 1.5 million more refunds of more than $5.8 billion. What are you supposed to do? The following tips come from Alisdair Faulkner, chief products officer of ThreatMetrix, a technology security company based in San Jose, Calif.:
    1. Choose only a tax preparation service or website providing bank level security such as two-factor authentication.
    2. Keep your eye on the address bar, ensuring that the web form has “s” right after the http in the web address and that each page has a valid IRS or preparer address.
    Page 2 of 2 - 3. If, during the process, you receive any additional emails or pop-ups requesting personal information, do not respond at all.
    4. Use a password unique from any other personal accounts, especially any for social media.
    5. Make sure you have updated anti-virus and malware protection on your computer before you begin any tax preparation process.
    Ron Finke is president of Stewardship Capital, a registered investment adviser. This is general advice and not meant to contain specific recommendations. Reach Finke at rcfinke@stewcap.com.
     
     

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