Taxpayers Beware: Protect Personal Information When Filing Taxes

Avoid Being a Victim of Identity Theft and Other Scams

Date: March 26, 2010

Contact: Paul Golden 303-224-3514, [email protected]

DENVER—Tax season is the one time of year when nearly every American divulges personal information about his or her financial life to outsiders. Although services such as electronic filing and refund anticipation loans are convenient if you’re busy or need quick access to your refund, be aware that this creates optimal conditions for people to take advantage of you.

Some of the red flags to be aware of this tax season include:

  • Criminals wanting to steal your identity
  • Businesses offering you expedited refund loans carrying high fees and triple-digit interest rates
  • Tax preparers filing fraudulent returns on your behalf

"You need to be on high alert when your money is involved, but especially this time of year," says Brent Neiser, CFP® and director of Strategic Programs and Alliances for the National Endowment for Financial Education.

Beware of “phishy” e-mails

If an e-mail from the Internal Revenue Service (IRS) lands in your inbox, don’t hit reply. The IRS doesn’t send unsolicited e-mails to taxpayers. Most IRS impersonations involve identity theft, such as criminals trying to obtain your Social Security number or other sensitive personal information using a practice dubbed "phishing."

How does phishing work? You receive an e-mail with the bait, such as a fake refund. The e-mail directs you to open an attachment or click a link to a form to claim your refund. But first you have to divulge personal financial information such as credit card numbers, personal identification numbers, or your Social Security number.

If you get a suspicious e-mail:

  • Don't open attachments and avoid clicking on links, as they may contain harmful code that infects your computer, potentially exposing your personal information
  • Never volunteer your personal financial information in response to (or, to the sender of) an unsolicited e-mail
  • Visit the IRS online tool Where’s My Refund? to check if you’re owed money
  • If you suspect your computer has been compromised, you can conduct an inquiry by phone by calling the Federal Trade Commission at 1-877-IDTHEFT.
  • View sample real-life phishing scams at
  • Forward any suspicious e-mails to [email protected]

Say “No” to Refund Anticipation Loans

Even if you need money, avoid a loan backed by your expected refund. It might cost you hundreds of dollars. The CFA and the National Consumer Law Center calculate Americans surrendered approximately $800 million from refund checks in 2008 to cover fees for refund anticipation loans (RALs).

What’s a RAL? A tax preparer might offer a loan that is backed by your projected refund. RALs last one to two weeks, or until your refund check arrives and you can repay the loan. The interest rate, plus the filing fee and a same day processing fee, can cost hundreds of dollars. And you may be saddled with debt if your refund doesn’t pan out.

"Most people have heard of a payday loan. This is a tax-day loan," says Neiser. "Loans like this are risky. With added fees, you could end up losing much more than you anticipated in your refund."

Instead, file your returns electronically and request that your refund be deposited directly in your bank account. You may receive your refund in as little as a week or two. If you don’t have a bank account for an electronic deposit, ask a nearby bank or credit union about establishing a low-cost savings account.

Audit Tax Preparers

Low-to-moderate-income earners qualify for free tax-preparation services through the IRS called the Volunteer Income Tax Assistance (VITA) program. Find a VITA program in your area or call 1-800-906-9887. The AARP also offers a volunteer-based program, especially to those 60 years old and above, called Tax-Aide. Search online for a Tax-Aide site near you.

If you don’t qualify for free and secure tax preparation assistance, do your homework when choosing a tax preparer.

  • Look at his or her history and credentials. Avoid someone who says he or she can net larger refunds than other preparers or an individual who bases his or her fee on a percentage of the refund. You’ll run the risk of using someone who engages in dishonest practices to help you secure a big refund.
  • Remember that you’re legally responsible for the return that is being filed. Although the preparer bears most of the tax work, if the IRS confirms fraudulent items in your return, you may be liable for additional taxes, interest, and possible penalties.

For more tips on selecting a tax preparer, visit

Whether you’re an early-bird filer or an April procrastinator, there’s a lot to be aware of this tax season.Changes in your life and alterations to the tax laws will affect how you file. Stay up-to-date by visiting us each week through March. Visit NEFE’s tax series at



  • Paul Golden

    Media Relations Director

    Direct: 303-224-3514
    Cell: 303-918-3620
    [email protected]