May 4, 2017 4 min read

There has been a big increase in telephone calls where a caller claims to be from the Internal Revenue Service and states that the agency is getting ready to file a lawsuit. I have received several of these calls at home. The person on the other end of the line tells you to phone a number to take action and avoid the suit.

But that is not how the IRS handles its business. If it had questions about your tax return, you would receive a letter from the agency. Usually, the first one would say the agency think it has found a mistake and if you agree, it will make the change, and you may owe some additional tax and interest.

Sometimes the agency is wrong about what it thinks it discovered. You can write a letter explaining why you handled the matter in your original filing. The IRS will send you a second letter informing you if they agree.

If you do not answer the first letter, you may receive a series of letters detailing the agency’s concern. They may telephone you after an extended period of time. They will not send you e-mails about a possible problem.

Do not call the telephone number they leave on early calls. If you have been receiving letters, call their office yourself to find a solution. They offer payment plans if you owe taxes. They will never ask you to make the payment with a pre-paid debit card – scammers like those because they are difficult to trace.

There are other scams that are currently occurring. Almost every week, we hear about another cybersecurity breach. One of the easiest ways for someone to steal your data is through your e-mail.

A study by BreachAlarm found that 41 percent of people who check their e-mail address against a database of known hacked e-mails find their address has been compromised.

Once your e-mail is obtained, scammers can use password resetting features to take control of your account. The answer to security questions are often provided by you on different social media platforms. Questions like family first names, what school you attended and many other commonly asked questions are readily available. Once they have control of your e-mail, they can look for links to your financial information. There are people who have had their bank accounts drained with this information.

To reduce your digital footprint, you may want to use a secret e-mail for financial matters. Some e-mail providers are phasing out passwords and using advanced features. One of these will send a special code to your cellphone that is needed to reset a password. Use this secret e-mail only for financial matters and keep it out of the public eye.

News recently broke that the government’s site used for filling out FASFA college funding reports has been hacked. This tool allowed families to access income tax information to help fill out financial aid forms. The hackers got information on more than 10,000 families.

If you recently used this tool, monitor your credit report carefully. The official website to get your free credit report is www.annualcreditreport.com.

Another area of fraud that has seen a recent increase in activity is in Health Savings Accounts or HSAs. Many people with high deductible health insurance own these accounts. Nationwide, these accounts hold an estimated $37 billion on 20 million individual accounts. Scammers search the black market for stolen information, which is sold for between $80 and $100. With the information, crooks can transfer money out of your HSA. Most people do not monitor these accounts frequently.

Protecting your identity should be a priority in your life. Keep up to date on current scams and be careful with the data you share about yourself. These problems are getting worse and will not go away soon.

Gary Boatman is a Monessen-based certified financial planner and author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”

To submit columns on financial planning or investing, contact business editor Michael Bradwell at mbradwell@observer-reporter.com.