What would you do with an extra $3,000?
During tax season, many Americans receive just such an influx of cash: in 2019, the average tax refund was $2,725. Consumers often rely on a refund check to pay down debts, make a large purchase, or boost retirement savings.
But what if the anticipated funds wind up in a criminal’s account instead?
Tax-related identity theft happens when a criminal uses your Social Security number or other personally identifiable information (PII) to file a fraudulent tax return in your name. If this happens, your refund could end up in the wrong hands — and getting it back isn’t easy. That's where InfoArmor steps in!
Here’s what you need to know about tax-related identity theft.
How common is tax-related identity theft?
Tax refund fraud affects hundreds of thousands of Americans each year. According to the IRS, 242,000 reports of tax-related identity theft were filed in 2017. While that number is staggering, it does mark a decline from previous years.
Tax fraud is becoming less common thanks to the IRS’s Security Summit initiatives, a coordinated effort between government agencies and private-sector tax preparers. The participating groups work together to share data and help flag suspicious activity — such as a large number of reports being filed from a single IP address.
Even with this collaboration, thousands of people will fall victim to tax-related identity theft this year. If you’re targeted by such a scam, you may have trouble getting the tax return you’re owed, or the IRS may believe you owe money when you don’t.
Tips for preventing tax-related identity theft
While there’s no way to guarantee that tax fraud won’t happen to you, it’s a good idea to take these proactive steps to protect yourself — and your refund.
- File your return as early as possible. If you’ve already filed a legitimate return, a thief should be blocked from filing a fraudulent one.
- Practice good privacy hygiene. The IRS recommends that all taxpayers take precautions such as using security software, encrypting sensitive information, creating strong passwords, and opting for 2FA whenever possible.
- Don’t take the bait. A criminal may pose as an IRS official or tax preparer in an attempt to phish for your passwords or other personal information. Remember that the IRS does not use email or text messages to request personal information from taxpayers. In addition, any urgent request from a tax preparer to “act now!” by clicking a link or downloading an attachment should be regarded with suspicion.
- Choose a tax preparer with care. Check out the IRS’s tips for vetting your preparer. A qualified preparer should have a Preparer Tax Identification Number (PTIN) from the IRS as well as professional credentials, such as a certified public accountant (CPA) license.
- Use a quality identity protection service. If you’re a PrivacyArmor member, bots and human operatives are already scouring the dark web for your Social Security number. You can also add other credentials, like important account usernames and credit card numbers, to our Dark Web Monitoring tool. If we find your information where it doesn’t belong, we’ll let you know ASAP.
- Keep tabs on your tax account. Did you know you can log in to the IRS website to see if anyone has filed a report in your name?
What are the signs of tax refund fraud?
It’s important you know how to recognize tax-related identity theft, so you can take immediate action if you suspect you’ve become a victim. Here are some signs that point to fraud:
- You receive a letter from the IRS about a tax return you did not file.
- You’re unable to e-file your return because one has already been filed with your Social Security number.
- IRS records show you received wages from an employer you don’t recognize.
- You get an IRS notice that an account has been created or modified in your name, but you didn’t take any action.
- You receive an IRS notice that you owe money for a year you didn’t file.
Charting a path to recovery
If a scammer has filed in your name, don’t despair. The following steps can kick-start the recovery process:
- If your return is rejected because of a duplicate filing, fill out IRS Form 14039, Identity Theft Affidavit (PDF) and attach it to your return.
- If you receive a written notice from the IRS, call the number provided or visit irs.gov/identity-theft-fraud-scams/identity-verification to document the incident.
- Request a copy of the fraudulent return from the IRS.
- Continue to file your tax return even though the fraud is being investigated and resolved.
- Lock or freeze your credit with the three major credit-reporting bureaus.
- Visit identitytheft.gov to report the incident to the Federal Trade Commission.
So, you’ve taken the above steps. How long until you’re officially cleared? And when will you receive your refund? The IRS says it typically takes between 120 and 180 days to resolve cases of tax-related identity theft. You can learn more about the agency’s approach to identity theft resolution by visiting IRS.gov.
If you’re a PrivacyArmor member, you won’t have to navigate the recovery process alone. If you’ve fallen victim to tax-related identity theft, our Privacy Advocates are standing by to offer round-the-clock assistance with remediation. In some cases, our certified reps can even assume limited power of attorney and directly work with the IRS to file the required paperwork.
During tax season — and every other season, too — you’ve got a friend in InfoArmor.