Stay Safe this Tax Season: Tips for Veterans to Avoid Scams

As the tax season is underway, it's important for individuals, including Veterans and their families, to be vigilant against scams and fraudulent activities targeting taxpayers. The Internal Revenue Service (IRS) warns that millions of dollars are lost each year due to tax-related scams, making it imperative for everyone to stay informed and cautious.

Understanding the Threat

Tax fraud ranges from abusive tax preparers exploiting clients to schemes involving impersonation of IRS officials. Veterans and their families are often targeted due to their personal information and circumstances being exploited by scammers. It's important to be aware of common tactics used by fraudsters, such as fake emails and threatening phone calls.

Know Your Benefits

One important aspect for Veterans to remember is that many VA benefits are tax-free, including VA insurance proceeds. Additionally, Veterans with a service-connected disability rating may be eligible for local property tax exemptions. Understanding these benefits not only helps Veterans differentiate between legitimate IRS communications and potential scams but also ensures they receive the full extent of benefits entitled to them.

Utilize Identity Protection Tools

The IRS offers Identity Protection (IP) PINs as an additional layer of security to combat tax-related identity theft. By enrolling in the IP PIN program, taxpayers receive a unique six-digit number to verify their identity when filing federal tax returns. Taxpayers can request an IP PIN annually through the "Get an IP PIN tool" by completing an identity verification process.

However, an IP PIN is valid for one calendar year and must be obtained annually. Correct entry of this PIN is crucial on both electronic and paper tax returns to avoid rejections and delays.

Stay Vigilant

"There is a sense of urgency or persistent follow-ups that demand an immediate response or payment. The goal is to create fear," says Jodi Daniels, faculty member at IANS Research and founder and CEO of Red Clover Advisors, a data privacy company.

While IP PINs offer increased security, participants must remain vigilant against potential scams. The IRS will never initiate contact via email, text, or phone call to request an IP PIN from taxpayers. "Real IRS issues come in the mail on formal letterhead and require logging into the IRS or state tax revenue centers," Daniels adds.

Taxpayers should only share their IP PIN with trusted tax providers for tax return purposes and avoid disclosing it to unauthorized individuals.

Reporting Suspicious Activity

Taxpayers encountering tax-related illegal activities, including IRS-related phishing attempts and fraud, can report them to the Treasury Inspector General for Tax Administration at 800-366-4484.

Reporting suspicious activity helps authorities investigate and combat fraudulent schemes, ultimately protecting taxpayers from financial losses and identity theft.