More than 150 million Americans had their personal data compromised in 2017, and 2018 is expected to be a record-setting year for tax fraud.
While identity thieves can scam the IRS in many ways, one of the most popular is to file a fraudulent tax return on behalf of a victim. All they need is a Social Security number and a name, and cybercriminals can make off with nearly anyone’s hard-earned money.
Tax fraud is a billion-dollar problem
Here’s what you need to know about one of the nation’s largest scams.
Tax fraud is a big business in the U.S., and it shows no signs of slowing down. In 2015 alone, the Internal Revenue Service (IRS) identified and stopped about 1.4 million returns filed by identity thieves, and saved a staggering $8 billion from entering the wrong hands. These figures do not include business-related tax schemes, which have also soared in popularity during recent years.
The numbers are both encouraging and troublesome. On one hand, the IRS is getting much better at identifying fraudulent returns of all types. On the other hand, there has been a significant increase in identity theft-related attacks across the board. And, with last year’s surge in data breaches, you can bet crooks will be targeting taxpayers like never before.
A disturbing new trend shows that accounting firms have become major targets as well. By the summer of 2017, a new phishing scam got so out of control the IRS released an official warning to all tax preparers.
It’s official - cybercriminals are targeting everyone they can think of, and if they file taxes on your behalf, it could take months before you get the money you’re owed. This year might be particularly bad, as the IRS will be facing more than $150 million in budget cuts. That will likely amount to a lot less employees and resources, and a lot more time listening to music while you’re on hold.
Protecting yourself from tax-related identity theft
☆ The first, and most important, step you can take to protect yourself from tax fraud is to file your taxes as soon as possible.
☆ Educate yourself on further steps you can take to reduce the risk of having your identity stolen. Here are just a few of the ways the IRS recommends playing it safe:
☆ Always use security software with firewall and anti-virus protections.
☆ Learn to recognize and avoid phishing emails and threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card companies and even the IRS - remember, the IRS will never call you about a bill without first mailing you a notice.
☆ Do not click on links or download attachments from unknown or suspicious emails.
☆ Protect your personal data - don’t routinely carry your Social Security card, and make sure your tax records are secure.
Familiarize yourself with signs of tax fraud. If after you file your taxes you discover any of the following, you may be a victim of tax fraud:
☆ The IRS reveals more than one tax return was filed using your Social Security number
☆ You owe additional taxes or have collection actions taken against you during a year when you did not file taxes
☆ Official records from the IRS indicate you received wages (or other income) from an employer for whom you did not work
☆ Your and/or your employer’s records differ from those of the IRS
If you believe your data was breached or if you have been a victim of identity theft in the past, you should submit a Form 14039 to the IRS. This Identity Theft Affidavit alerts the IRS to potential fraud, and depending on the circumstance, the IRS may assign you a PIN to protect your tax return.
If you recently discovered you’re a victim of identity theft, you’ll also need to file an official identity theft report with IdentityTheft.gov. From there, you will be directed to future actions you must take.
Finally, you should check with your HR department to see if your employer provides an identity protection service as a standard or voluntary benefit. If they do, sign up your entire family as quickly as possible.
If your employer doesn’t offer such a plan, you might mention your interest in the service and even pass along our ebook, “Why Companies Should Care if Employees Have Their Identities Stolen.”
American Association of Retired Persons (AARP) Tax-Aid volunteers are working at the Oakhurst Library Community room between 9 a.m. and 4 p.m. every Tuesday through April 17 (the last day to file returns this year).
The tax assistance is offered to persons of all ages and people do not need to be a member of the American Association of Retired Persons (AARP) to receive the services.
Returns are prepared on site and then electronically filed the same day.