MICHEL MARTIN, HOST:
Now to matters of personal finance. So the deadline to get your tax returns in is fast approaching. But during this last minute scramble you should proceed with some caution, that according to our next guest. She says that there are a few scams out there that could put you and your money at risk. The IRS is reporting that the amount of investigations into some scams has tripled since 2011 and now might be a good time to pay close attention to how you handle your taxes. Here to tell us more about this is consumer columnist Sheryl Harris. She writes for The Plain Dealer in Cleveland. Welcome back, Sheryl. Thanks so much for joining us.
SHERYL HARRIS: Thanks, Michel. It's great to be back.
MARTIN: To scare us to death, again.
HARRIS: I'm really working on some non-scary thing we can talk about.
MARTIN: No, good news coming from Sheryl except how to protect yourself. So what are some common tax scams? Is this a relatively new thing to worry about?
HARRIS: I don't know that it's new, I know that it's - kind of seems like it's gaining momentum a lot. So one of them is tax ID fraud. And that's where a scammer uses your Social Security number and kind of beats you to filing a tax return. They make off with a bloated refund and it's really hard for you to, you know, file your taxes and get your refund. So...
MARTIN: There's no check and balance on this? I mean, do they - if all they need is your Social Security number, do they have to have other personal information about you, like where you work and things like that? They don't need...
HARRIS: OK, well, whereas you're going to be really honest on your tax return and have all that documentation, the tax scammers don't really care so much about that - they're trying to get the biggest refund they can 'cause they're stealing. So the IRS because this really got out of hand in 2010 - it had been happening for many years kind of under the radar before, but in 2010 it got out of hand. They've tried to put in new checks and balances. But just to let you know, there are, like, more than a million victims of tax ID fraud in 2012, and there were 1.6 million victims - that's more - in just the first half of 2013. So this is not something that has been reined in by any means.
MARTIN: Another scam you came across is the investigation scam. Tell us how that works.
HARRIS: Yeah, so this is one of our caller scams or sometimes it's an e-mail scam but someone posing as an IRS agent - a lot of times they'll even have a badge number and a case number - they'll call and try to scare you. They'll tell you there's a problem with your return or you are under investigation for something wrong. And it's sort of to scare you, sometimes to give out your personal information, but more often it's really to scare you into making a payment that you think you owe and that you're going to head off an investigation.
MARTIN: And is this targeted toward people of a particular group? I mean, you were saying that immigrants might be particularly at risk...
MARTIN: Because they're not familiar with the system and realize that the IRS doesn't call you up and demand money from you.
HARRIS: Right. And so there have been groups of immigrants that people call and they threaten them with deportation if they don't take care of this issue. And sometimes that is a one-two scam. So you get the fake IRS agent who hangs up and then someone calls posing as, say, an INS agent or a local, you know, police agent saying, you know, we just got contacted by the IRS. So you get kind of this one-two thing and you really think there are a lot of agencies circling around you. And if you don't know that the IRS will never phone you to tell you about an investigation or, you know, a problem on your return or you don't know that they won't e-mail you to do that, it's really easy to be scared 'cause they use - you know, they sound professional when they do it. They've got their game down that much.
MARTIN: So what are some of the things that you can do? I mean, if you're the victim of one of these scams and you get charged a lot of money - for example, to prepare your taxes, which is when you can get that kind of tax help for free, that's another thing you were telling us about - is preparers. This is not exactly a scam, but this is - you know, preparers who want to put your tax refund into a prepaid card and then they pull out, you know, excessive fees. What can you do? I mean, particularly on that first thing you were telling us about - I mean, how would you even know this was happening?
HARRIS: The - what? The tax ID fraud? Or...
MARTIN: The tax ID fraud.
HARRIS: OK, so you'll - you should get a letter if you file your taxes and someone else has used your security number. You'll get a letter from the IRS saying, hey, we already have a return in your name. It's just really important to contact the IRS right away. And additionally, I would just like to say, if someone is using your Social Security number and you know it's been stolen, you can proactively contact the IRS.
They have an ID theft unit and they say that they will take action to kind of help you make sure that you're - that they recognize that you have an issue. And they're testing a pin number program - it's not enforced for everyone yet, but they're testing that to see if that might be a solution too. So I would contact them if you know your Social Security number is in a way...
MARTIN: What if you are a person who has been contacted by one of these scammers claiming to be an investigator and you've made this kind of payment? What can you do? Do you have any recourse?
HARRIS: You know, it's hard to get money back from scammers but the best place to report that is to the Federal Trade Commission. They're kind of the scam - and the nice thing about reporting to them is they will send it to all agencies that could possibly - you know, they'll share it with other agencies. So that's FTC.gov. And the IRS site, by the way, is IRS.gov. So I would contact the FTC for those and for preparer fraud.
MARTIN: And probably keep like a really big box of chocolate right next to you so that you can kind of prepare your attitude after...
MARTIN: What are your tips for keeping it together during tax season, Sheryl, very briefly?
HARRIS: I like the chocolate - I like the chocolate idea. But - so can I just tell you, though...
MARTIN: Very briefly.
HARRIS: ...Before we go about the - if you make - if you're a senior citizen, and you make less than $52,000 a year, you're likely eligible for free in-person tax help. So it's not quite as stressful for you. You can take the chocolate to the preparers. So if you go to IRS.Treasury.gov/FreeTaxPrep or you call the IRS at 1-800-906-9887, they can help you find a local in-person free - free volunteer tax help. And that will save you $500 - $600 bucks right off the bat getting your taxes done if you're low-income.
MARTIN: OK, Valentine to you, Sheryl Harris. Sheryl Harris is consumer columnist...
HARRIS: I still get one?
MARTIN: You still get one - for The Plain Dealer in Cleveland. She was with us from member station WCPN in Cleveland. Sheryl, thank you.
HARRIS: Thank you. Transcript provided by NPR, Copyright NPR.