IRS Changes to Combat Identity Theft and Fraud Can Slow Down Your Refund

Most of us probably don’t count tax return season as our favorite time of year, and new changes to the way the IRS processes refunds might even make it more annoying for some of us. The agency has announced that it expects to delay the issuance of taxpayers’ refunds next year in anticipation of stricter oversight.

The IRS is no stranger to problems involving tax return fraud. For years, the agency has admitted that it pays out billions of dollars annually in fraudulent tax refunds. The crime is so lucrative, in fact, that hackers and scammers have shifted their focus from stealing information like credit card numbers—which can easily be cancelled—to grabbing data like Social Security numbers, which cannot easily be changed.

The end result is a headache of epic proportions for the victims of the crime who attempt to file their legitimate returns, and the loss of billions of dollars each year, money that taxpayers paid to the government under the auspices of being a part of a functioning society.

Part of the fraud problem has been blamed on the method by which the IRS pays you back your refund. With electronic deposits and even the option to have your refund sent to an untraceable prepaid debit card, there is literally no telling where the money ended up once the IRS paid it to a thief. These measures were first put into place in order to give taxpayers back their refunds in a timely way, but they’ve opened the door for even easier fraud.

Now, the IRS is warning taxpayers that the rapid refund process is partly to blame and therefore will be investigated more closely. By processing a fraudulent return and paying the refund immediately, the money for your legitimate refund is gone. Therefore, the IRS plans to hold onto refunds, especially those that include the Earned Income Tax Credit or the Additional Child Tax Credit—two easily faked deductions that scammers use to up the amount “you’re” owed—in order to process the returns more carefully.

Never fear, this move is not an effort to decrease the amount of a refund you’re owed. It’s simply a better safety net on the IRS’s part, designed to give them a chance to make sure any returns filed in your name are actually yours. By warning citizens now that there can be a delay in issuing refunds, they hope to keep taxpayers from shouldering an unfair financial burden if they were expecting their legitimate refunds in a timely way.

Anyone can be a victim of identity theft, anyone can use our services, and anyone can help us help others. If you found this information useful, please consider donating to the Identity Theft Resource Center to help us keep our services free to the public.

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