Tax season means a paperwork blizzard. Often, someone loses a copy of an important document and needs it to be re-issued. Naturally, everyone's too busy to verify the authenticity of each request.  That's what scammers are counting on with a recent ploy targeting people who prepare tax forms. In this scheme, the scammer sends an email claiming to be a hired company or someone from the IRS requiring duplicate copies of W-2s. An overworked clerk fears noncompliance with the tax authority and sends the forms.

 

Those forms contain personally identifiable information, including a name, address and Social Security number. With that information, fraudsters can open fake credit cards, apply for loans or file a fraudulent tax return in an attempt to grab a refund check.

 

If You're Targeted

If you prepare W-2s, be on guard for these fake emails. Here's the sample text from one such message:

"ATTN: Due to some complains we had concerning the W-2 mismatch, We advice you to send your 2015 filled W-2 form in (PDF) format for confirmation."

 

Notice the abbreviations, the typographical errors and the poor punctuation. These should tell you this isn't the professional work of the IRS.

 

You may also get a similar message that appears to be from your boss. Watch for the same typos and always confirm these requests in another message. Also, look out for emails from former employees. Scammers may be relying on outdated information.

 

If someone really needs another copy, it's safest to mail it to them. Email is never fully secure. It's also unlikely that someone would need duplicate copies of ALL W-2s. Be suspicious of any such request.

 

If Your Information Has Been Compromised

If your information has been unwittingly released by your employer, don't panic. Minimize the impact of this data breach with these three steps:

 

First, call one of the major credit bureaus, Experian, Equifax or TransUnion, to request a fraud alert on your account. This will force anyone who wants to issue credit in your name to verify their identity.

 

Next, order a copy of your credit report to see all the accounts open in your name. If there's anything you don't recognize, immediately close the account. Also, review statements for the accounts you have. If you see any charges you don't recognize, call the issuing institution and shut the account. Alerting them about fraud as soon as possible limits your liability.

 

Third, file a complaint with the Federal Trade Commission (FTC) at www.identitytheft.gov. This will create a fraud affidavit, a document certifying that fraud occurred. This will help when you need to file a police report.

 

It's worth filing your taxes early. If a thief tries to file a tax return using your information after you've already done so, the IRS will be alerted to the fraud.

 

SOURCES:

https://www.identitytheft.gov/#what-to-do-right-away

https://www.irs.gov/uac/newsroom/irs-states-and-tax-industry-renew-alert-about-form-w2-scam-targeting-payroll-human-resource-departments

http://conservativetribune.com/scam-alert-if-you-receive-this/

http://krebsonsecurity.com/2016/02/phishers-spoof-ceo-request-w2-forms/

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An inheritance. A lump-sum retirement distribution. Proceeds from the sale of a business. An insurance settlement. If you receive a large amount of money someday, you'll want to develop a plan for managing your windfall wisely.

Take a Little Time

Resist the temptation to go on a major spending spree. If you splurge on lots of expensive items, you may exhaust a large portion of the funds and be not much better off than you were before. Even more important, if you spend the money, you may be unable to accomplish other, longer term goals. Don't act too quickly. Consider the consequences before making any major decisions about your new wealth.

Treat Yourself

That said, you may want to spend a portion of your newfound wealth on a special purchase or personal treat. However, consider limiting your "splurge" to a small percentage of your windfall and using the remaining funds to achieve your more important goals.

Find Short-Term Parking

Consider depositing your lump sum in a money market account, certificate of deposit or other short-term investment while you devise a sound, long-term strategy. As part of your planning, you'll want to determine whether your windfall has any immediate tax impact. For example, if you receive a distribution from an employer-sponsored retirement plan, you may be able to roll over the distribution into an individual retirement account (IRA) and avoid current income taxes on the distribution. You also should address longer term tax planning issues.

Prioritize Your Goals

Your personal circumstances should dictate your spending and investing moves. Are you looking to buy a new home, pay off debt, build up your retirement nest egg or save for college expenses? If you carry credit card or other high-interest debt, you may want to pay it off first. Paying down a loan is essentially the same as earning a rate of return equal to the interest rate on the loan.

Review Your Estate Plan

Now may be a good time to review your will and estate plan. As a result of your new wealth, you may want to set up a trust and/or develop a gift-giving strategy. Appropriate planning techniques can help you control estate taxes and pass your wealth to your loved ones or other desired beneficiaries.

We Can Help

If you receive a large sum of money, we can review your tax and financial situation with you and help you develop a plan for meeting your goals. We'll work with you to minimize taxes and maximize the benefits of your wealth. 

Please contact Members Trust Company Trust Officer Tamara Kidd at 813-631-9191, ext. 717.