Each month, the Identity Theft Resource Center provides assistance to thousands of individuals who have been the victims of identity theft or are looking for information. The ITRC follows up on the kinds of fraud and scams that led to their cases, in order to provide data to the public about the most prevalent threats.
In November, a full 39% of calls to the ITRC involved some form of government identity theft, which can manifest itself in a variety of ways. One of the more common concerns for government identity theft victims is their tax return.
According to ITRC and IRS resources, tax return fraud is a growing problem, one that amounts to nearly $4 billion a year paid out in the form of stolen refunds. The IRS is working on solutions to the problem, but in the meantime, it falls to consumers to defend their refunds.
All too often, victims of tax refund fraud don’t realize their identities and their refunds have been stolen until they attempt to file their own legitimate tax returns. Once they submit the forms and receive notice that a return has already been filed under their Social Security numbers, it’s too late… someone has already submitted a fraudulent return and most likely already received the refund. Criminals typically direct these refunds to be paid to a prepaid debit card, meaning it’s nearly impossible to track the money down. Regardless of criminal activity, you’re still required by law to submit your genuine return, and the paperwork involved in getting your return submitted can add to the frustration of knowing your identity has been compromised.
If your tax identity has been stolen, it’s important to act quickly and keep meticulous records. Make sure you maintain copies of all correspondence with the IRS or your tax preparer, if you used one. Do not let fears of red tape keep you from following through, either, as the IRS now has a department specifically assigned to addressing the problem of identity theft, and will work with you to move the case along as quickly as possible. Keep in mind that tax return time is a hectic time for the IRS, and be patient with the caseworker or agent assigned to help you sort through the situation.
One of the most effective ways to prevent a fraudulent return from being filed under your name is to file as early as possible. If your paperwork is in order and ready to be submitted once all of your W-2 documentation arrives in January, you’ll have a better chance of beating a criminal to the punch and avoiding this issue entirely.
But what if you’ve been the victim of identity theft that does not involve your tax return? Ordinary ID theft can still pose problems come tax time, as the criminal has access to enough of your information to sweep in and get one more payday off your data. Again, filing early will help prevent a criminal from getting their first, but working with IRS before you file and indicating your status as someone whose identity has been compromised may provide you with more up-to-date information on the steps you can take.
One important take away from tax return fraud and identity theft is to remember that the IRS will never reach out to you via email or phone, claiming that you owe money or have not submitted proper documentation. All legitimate correspondence from the IRS will be in the form of a paper letter mailed to your address on file, giving you a paper trail to follow on the matter. Keep all of this correspondence in a secure place, and label it according to any case numbers or agents’ names you’ve been given.
Join us 1/29 for a special-edition Twitter chat with @FTC on tax identity theft & tax return fraud. The experts will be on hand to answer your questions. You can join the chat 1/29/15 at 2pm ET by using the hashtag #IDTheftChat.