Scam Alert: Tax Time Identity Theft

Scam alert: Thieves are hard at work phishing for your tax refund, your bank account, or both. Most people don’t know they have been victimized until they file their own returns and the IRS rejects them.

InIdentity theft scammers stole more than $5.2 Billion in Tax ID thefts in a recent year, according to the Federal Trade Commission, which reports that it’s the biggest form of ID theft.

Tax ID fraudsters file early because they have a wealth stolen personal information that includes names, dates of birth, and Social Security numbers, which they can use to steal your tax refund.

The scam only works for returns that have not been filed by the real, legitimate taxpayer, so the scammers and fraudsters are working hard right now, betting that you wait until the last minute to file.

Simply, Tax ID theft is a lucrative business.

5 most common tax preparation mistakes

According to the National Consumers League, the scam works this way:

A tax ID fraudster, often part of a ring of scammers, files dozens or even hundreds of phony returns with other consumers’ personal information on it with the goal of tricking the IRS into issuing a tax refund before the legitimate taxpayer can file.

Typically, the first inkling you get that you were a victim is when you file and it is denied by the IRS because the scammers have already filed in your name and cashed in on your refund.

Even your kids are not immune from Tax ID fraud. A popular tactic of tax ID fraudsters is to use stolen children’s personal information and claim them as dependents in to get an even bigger refund.

The IRS claims state tax authorities and tax preparation firms are taking steps to reduce Tax ID identity theft scams for the current filing season, but it won’t stop the fraud completely.

Simply, it’s up to you to protect yourself and your identity from theft.

How to protect yourself from Tax Frauds and Identity Theft

File as early in the tax filing season as possible. The longer you put off filing your taxes, the more time you give the scammers to run their scam.

While the IRS will accept returns as early as January 1, most likely you’ll have to wait at least until mid-January, until you get your W-2 forms and 1099 forms from banks and brokerage accounts.

Once you have those critical documents, start working on your state and federal returns immediately.

This is especially true this year, with new federal tax rules and new security measures put into effect by online tax preparation firms. They can add additional time to complete your forms.

Protect your personal information

Taking steps to reduce the exposure of your personal information online is a smart strategy any time of the year. It is doubly true during tax time since tax ID thieves will be trolling the Internet looking for personal information they can use to commit fraud.

These tips are valid any time of year, and especially at tax time.

Be sure your computer software is up to date, especially programs that protect you against malware or spyware,
Change passwords on social media and web mail accounts,
Don’t use the same password across multiple accounts,
Turn on two-factor authentication,
Check your credit report for unauthorized activity.

It’s also a good idea to contact the credit reporting agencies and put a freeze on anybody opening new credit cards or applying for a car loan or mortgage in your name.

You can remove the freeze after April 15. Or not.

Warning Signs You’ve Been Scammed

These warning signs are via Identity Force personal protection software –

You get a letter from the IRS inquiring about a suspicious tax return that you did not file.

You can’t e-file your tax return because of a duplicate Social Security number.

You get a tax transcript in the mail that you did not request.

You get an IRS notice that an online account has been created in your name.

You get an IRS notice that your existing online account has been accessed or disabled when you took no action.

You get an IRS notice that you owe additional tax or refund offset, or that you have had collection actions taken against you for a year you did not file a tax return.

IRS records indicate you received wages or other income from an employer you didn’t work for.

You’ve been assigned an Employer Identification Number but you did not request an EIN.

Beware of Phishing Emails

Know that the first notice you receive from the IRS is by traditional mail, not by email or phone.

Emails that look like they are from an organization you know, including from the IRS or your bank, but really come from scammers. As we all know by now, phishing emails are designed to trick you into clicking on a link or attachment that installs malware on your computer.

That malware could harvest personal information like passwords or other sensitive information tax ID thieves can use to files their phony returns, or steal your bank account.

Be especially wary if you get an email asking you to pay back taxes via gift cards or even cryptocurrency.

Do NOT click on any links or attachments. Instead, look up the customer service telephone numbers for these organizations and contact them on your own if you’re concerned.

While there’s no silver bullet for preventing tax ID fraud, these sensible tips can reduce your risk of becoming a victim.

If You Are a Victim of Tax Fraud

If you do fall victim to tax ID fraud, report it promptly to the IRS and your state tax authorities. They have programs in place to help you recover from these scams and help make sure it doesn’t happen again.

Complete and submit an IRS Identity Theft Affidavit. IRS Form 14039, Identity Theft Affidavit,

It is a fillable form on the IRS website and should be filled out if you try to e-file your taxes and they get rejected due to a duplicate filing.

Fill it out, print it, attach the form to your paper return and mail everything to the IRS.

For more tips on reducing your risk of tax ID fraud and a step-by-step guide for addressing it when it happens, visit the Fraud.org tax ID fraud guide

This SCAM ALERT was published originally in 2015 and has been updated for this tax season.

ecoXplorer Evelyn Kanter is a journalist with 20+ years of experience as a newspaper and magazine writer, radio & TV news producer & reporter, and author of guidebooks and smartphone apps – all focusing on travel, automotive, the environment and your rights as a consumer.

ecoXplorer Evelyn Kanter currently serves as President of the International Motor Press Assn. (IMPA) and is a former Board Member of the Society of American Travel Writers (SATW)

Contact me at evelyn@ecoxplorer.com.