Watch out for this new scam

By Priya Anand, MarketWatch

Phone scammers are calling taxpayers and pretending to be Internal Revenue Service officials who need to verify personal information such as Social Security numbers and banking details.

When criminals typically call taxpayers posing as IRS agents, they demand money over the phone for taxes they claim are due. The IRS said in March it has begun receiving reports "in the last few weeks" of phone scams that use a slightly different tactic: They don't ask for money, and instead request personal financial information, pretending they need to verify it.

The IRS said in February that it had seen a 400% increase in phishing and malware schemes aimed at stealing taxpayers' personal information this tax season, and warned taxpayers and preparers not to click on tax-related emails. The agency received nearly 1,400 reports of phishing and malware schemes to steal taxpayers' personal information from January to mid-February, up from 455 last year.

The IRS began accepting tax returns on Jan. 19 and the deadline to file is April 18. Here are the scams taxpayers should watch for this time of year:

'Click on this link to update your tax information' or 'Download this attachment of your tax refund receipt.'

Don't click on email links that claim you must update your tax records with the IRS, or that there was a processing error with your return. Cyber thieves circulate malicious links that direct users to websites that mirror IRS.gov, but they could infect your computer or request your personal information. The IRS says it never emails taxpayers for personal information. Typically, agency employers don't call either, but if you receive a call, the IRS provides instructions online as to how to determine its legitimacy. The agency usually reaches people through mailed letters. The IRS also recommends taxpayers make sure they have security software, such as antivirus, downloaded and up-to-date on their computers to better protect against malware.

'Hello, I'm calling from the IRS. You owe us money and if you don't pay now, we will arrest you.'

The IRS will never call you asking for money. Typically, the agency will send a letter in the mail to reach a taxpayer. Fraudsters can rig caller IDs so the number that appears looks like it is an IRS line, and this often compels victims to provide financial information immediately.

Phone scams in which crooks pretend to be government officials requesting you pay taxes have surged in recent years, the IRS says. Since October 2013, more than 5,000 victims have collectively paid IRS-impersonating phone scammers $26.5 million, according to the Treasury Inspector General for Tax Administration.

Taxpayers who receive these fraudulent calls can report the caller's number online.

'To donate to this charity, please give me your financial information.'

Scammers impersonate charitable organizations or make up a nonprofit cause in hopes of attracting donations. Before donating, look up the charity in the IRS database of tax-exempt organizations to determine if it is legitimate, and if your donation is tax-deductible. Never send cash, and keep records of any payments for tax purposes.

'Your return has already been filed.'

Millions of Social Security numbers have been breached through health and medical care providers, government agencies and other organizations. The reality is that Social Security numbers are a nine-digit password we use to unlock our financial lives — except they can't be changed, even after they are compromised. If you file paperwork and receive a notification from your tax preparer or the IRS that a return has already been sent in under your Social Security number, follow the IRS guide to identity theft or visit identitytheft.gov, where you can fill out a questionnaire that will provide advice catered to solving your specific problem.

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