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Doing Online Financial Planning? Watch Out For Tax Scams!

Lily from The Honest Dollar brings us the following timely post for the tax season. Lily is a former investment banker and newcomer to the personal finance blogosphere, who shares with us her thoughts on the economy, investing, credit, insurance, savings and retirement through her blog.

There are tax scam emails going around the web this month that you should be aware of. After all, most of us are about to write a big enough check as it is next week. Don’t compound the cash drain by falling prey to some web-based con artist.

Some context first: As we have become more comfortable with online financial planning, identity thieves have become bolder in trying to use the internet to phish for personal financial information. It’s important that you know the steps to take to protect your finances and identity online. The service sponsoring this blog, Mint.com, was specifically designed to apply the convenience and power of the internet to the task of money management…while maintaining your anonymity. You can read more about how Mint keeps you safe and how they recommend you protect your identity online.

Some examples of 3 common tax scams circulating today:

  • Get your Tax Rebate Now!!! – Identity thieves claiming to be IRS employees ask you for personal finance information (including bank account numbers) in order to send you a tax rebate.
  • Big Refund by eMail!!! – You receive an email promising you $X in a tax refund. To claim the refund, you have to follow a link and enter your personal finance information.
  • Bad News…You’re being Audited!!! – Scammers send an email informing you that you’re the subject of an IRS audit. The email contains links to forms that collect personal information.

Warning Signs

None of these scams are new. Scammers used a rebate as bait when Congress passed the Advance Child Tax Credit in 2003. Phishers have also been masquerading as banks for a while. Even web-savvy people have been fooled. It’s a short leap from pretending to be a bank to pretending to be the IRS. As you work on your online financial planning tasks, you’ll need to be vigilant about the possibility of fraud.

It’s good news that tax scams are especially obvious. An email or phone call from “the IRS” should not be the first sign that you’ll be getting a rebate. In fact, the IRS never contacts people by phone or email. Hang up if a caller says he or she is with the IRS. Report any emails from the “IRS” as spam, and then delete them.

Protect Yourself

Check the IRS page on e-mail scams, which is regularly updated with new tax scams to watch out for. For broader scams (not tax-focused), check out the FBI e-scams warnings. When it comes to online fraud, knowledge really is power.

Further Reading:
Financial Planner
Online Finance Software
Personal Finance Advice
Online Finance
Online Personal Finance