With the April 15 deadline for filing federal and state income taxes fast approaching, now is an opportune time to consider strategies for avoiding tax-refund identity theft.
Identity theft has been a longstanding problem. By appropriating a victim’s Social Security Number and other personal information such as name, address and age, identity thieves are able to open credit accounts, make purchases, conduct financial transactions and commit other thefts and frauds.
More recently, identity thieves have been using victims’ personal information to commit tax-refund fraud. A data breach earlier this year involving fraudulent returns filed via the digital tax preparation service TurboTax brought this threat to light. Since then, there have been numerous reports of fraudulent tax return incidents across the nation.
Tax-refund fraud is expected to soar this tax season and total $21 billion by 2016, from just $6.5 billion two years ago, according to the Internal Revenue Service. One reason: It takes just a victim’s name, birth date and Social Security Number to file a tax return.
According to the Identity Theft Council, a non-profit advocacy group, there are steps that individuals can take to lessen the risk of tax identity theft or deal with its consequences after it occurs.
DON’T GIVE OUT INFORMATION
Be wary of email links and attachments that seek your data. Realistic-looking emails can harbor malware that could steal your personal information—a practice known as phishing. The IRS reminds taxpayers that it never initiates contact by email, text messages or social media.
Another pre-emptive action to take is to sign up at irs.gov and create an online account in your name so that tax fraudsters cannot do the same. This could help prevent identity thieves from creating an account and obtaining a copy of your past returns – and all of your pertinent information -- by filing IRS Form 4506.
Unfortunately, there is no way to find out if someone has already filed a tax return using your Social Security Number until you send in your own return and receive notification that one already has been submitted in your name. Filing early can beat thieves to the punch.
Meanwhile, be careful. Experts say to use strong passwords and change them frequently. Update computer applications, especially antivirus software, and make sure that wi-fi access is password-protected.
If you prepare your own taxes using a commercial product, make sure your personal information is accurate. What about filing a paper tax return? That may not help either. If thieves can get your Social Security Number and other information via another source, they can still file a false return.
IF YOU ARE A VICTIM, ACT QUICKLY
MORE INFORMATION FROM THE IRS
For additional information about tax-related identity theft, visit the IRS identity-protection page athttp://www.irs.gov/Individuals/Identity-Protection. Or call the IRS’s identity theft hotline 800-908-4490.