Help avoid online tax fraud

If you file your taxes over the Internet, it's important to remember some common-sense rules about protecting your privacy and helping to prevent identity theft.

The information in your return contains everything that an unscrupulous third party needs to steal your identity, file tax returns on your behalf, steal your refund, and more.

One of the most important things you can do to help protect yourself is to use Internet Explorer 7. For more information, see Keep your identity safer this tax season.

How to recognize and avoid scams

There are many scams associated with filing your taxes. To help avoid some of the more common scams, you should:

Be realistic. If it sounds too good to be true, it probably is. From companies that promise to file your taxes for free, to Web sites that claim you don't have to pay income tax because it's unconstitutional—keep an eye out for deliberately misleading statements.

Be informed. Before you file your taxes online, spend a little time at the Web site for the Internal Revenue Service (IRS). Familiarize yourself with how to use the Internet to file your taxes, and with how the official IRS Web site looks. For information on the latest threats, visit the IRS Tax Fraud Alert page.

Never respond to unsolicited e-mail offers or requests for information. The IRS does not use e-mail to communicate any personal information, and legitimate tax-preparation companies should not approach you with unsolicited e-mail.

These messages are most likely identity-theft phishing scams. For more information, read Recognize phishing scams and fraudulent e-mail. If you've been contacted by the IRS, you can call 1-800-829-1040 to find out if the contact was authentic.

To help protect against phishing scams, use the Microsoft Phishing Filter.

Make sure the Web site uses secure technology. If you are filing your taxes on the Web, make sure that the Web address begins with https (for example, https://www.tailspintoys.com/) and check to see if a tiny locked padlock appears at the bottom right of the screen, as shown in the following image.

Example of a Web site that uses https in the address and a secure site lock icon.

If you use Internet Explorer 7 you'll get another layer of protection with sites that use Extended Validation (EV) SSL Certificates. The address bar should turn green to alert you that there is more information available about the Web site. The identity of the Web site owner is also displayed on the address bar.

For more information, see Internet Explorer and Extended Validation SSL certificates.

Choose your tax-preparation software with care. Ask people you trust for software recommendations. For more information about e-file partners and tax software, visit the IRS e-file Partners for Taxpayers page.

Seek the advice of the IRS or a trusted tax professional before you participate in any tax-reduction scheme. Many offers to greatly reduce or eliminate your income tax payments are false.

If you try to take advantage of these so-called tax "opportunities," you could be wasting your money and committing a crime.

For a list of common scams that have been reported to the FBI in recent years, see IRS Announces "Dirty Dozen" Tax Scams for 2006.

What to do if you suspect online tax fraud

To read more articles about taxes or to get advice from experts, visit the MSN Money site. You can also find many more pages of information about taxes all over the Web, but remember to be wary of following any advice you find.

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