More than 150 million Americans had their personal data compromised in 2017, and that means 2018 could 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.
Here’s what you need to know about one of the nation’s largest scams.
Tax fraud is a billion-dollar problem
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 around 1.4 million returns filed by identity thieves and saved a staggering $8 billion from entering the wrong hands. These figures don’t even include business-related tax schemes, which have 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.
While cybercriminals have historically focused on businesses and individuals during tax season, 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 cheesy 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. This year, the IRS will begin accepting electronic and paper tax returns today, January 29. This should be your target submission date, although employers have until January 31 to deliver important tax information like W-2s. If you haven’t received the necessary paperwork by then, reach out to your HR or payroll department ASAP.
Second, 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
- Create strong passwords
- 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
Third, 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
Fourth, 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.”
How PrivacyArmor® can help you get your refund faster
One of the best parts about working for InfoArmor is being surrounded by an amazing team. This is especially true of our Privacy Advocates — certified specialists who work hand in hand with victims to fully restore their identity.
Yesterday, one of our top Privacy Advocates shared some details about her very first tax fraud case, and she agreed to let me share them here. Thanks, Sarah! Keep up the good fight.
“Maria attempted to file her taxes online when she discovered someone else used her Social Security number to request a refund. She was in a state of panic; her family was counting on this money. Now, this is usually where a victim would spend countless hours on hold and up to six months of their lives living in fear. But, Maria was a Privacy Armorx® member, and that means we were able to do the most difficult, and time-consuming, work for her.
We walked her through the process of mailing in her tax returns, submitting a Form 14039, filling out an identity theft report, placing an initial security alert on her credit, and filing a police report with her local department.
Next, we rushed Maria a Form 8821, which permits us to speak to the IRS on her behalf. We then placed extended security alerts on her credit profile by working with each of the major bureaus and performed weekly audits to ensure no additional accounts or inquiries were hitting her credit
Once we were allowed to speak to the IRS on Maria’s behalf, we spent many hours ensuring they received all requested documents and facilitating any additional requests. As a result, Maria received her refund a full 60 days sooner than expected.
When I shared this news with Maria, she was overwhelmed with joy. This was my very first tax fraud case, and I’m sure that I will remember it for years to come. Hearing that relief in her voice and knowing that we were able to make a difference in her life is something I will always take pride in.”