Safeguarding Tax Returns from Identity Theft
If you asked most people if they would notice a theft, the vast majority would be certain that they would spot any loss. Muggers, pickpockets and burglars all make their attendance known fairly quickly but there’s another type of light-fingered individual who shrouds himself in far more secrecy: the identity thief.
Identity theft has been a growing problem since the development of the internet and whilst it bring almost countless advantages, for those with corrupt morals, a whole new world of opportunity has been presented.
Submitting data online has become the new norm and undeniably it couples convenience and efficiency. Unfortunately, it also presents a prime opportunity for identity thieves, especially when it comes to tax returns.
We run through the problems around submitting IRS tax returns and provide some suggestions about how you might want to try and beat the odds of becoming a victim.
The issue
The problem starts because many organizations are not as careful with your personal data as they should be. Getting your social security number from a database is now as easy as pie for most accomplished identity thieves; hospitals, car dealerships, real estate agents all hold your most personal details but many fail to have the necessary security measures in place to prevent unauthorized access.
Once a scammer has your Social Security number they can submit an online tax return, and by purchasing a debit card and entering false details, they will get paid a refund by the IRS.
Unfortunately the IRS play a significant part in the problem as they do not verify any of the data provided until after the refund has been sent. This gives the thieves plenty of time to spend the money and run, leaving you to try and sort out your shredded identity.
An alternative method that some con men are using is the appearance of a valid accountancy outfit, advertising bargain basement prices to process your tax return on your behalf. No need to dig around for all your information as you provide them with everything! They submit the fictitious return, grab your refund and disappear.
The IRS solution
The problem has reached such magnitude that the IRS has taken on hundreds of extra workers just to investigate the cases which arise. As of September 2012, there were 3000 employees working on the problem.
This might sound like a great effort but when you hear that there are 65,000 cases and even getting an acknowledgement of your complaint is taking on average 204 days, the scale of the problem comes into perspective.
This can result in the problem still remaining unresolved when the next tax year rolls around, leaving the individual vulnerable to a repeat attempt by the scammers.
What you can do
Whilst the IRS is working hard to address the problem, there simply isn’t enough resource to properly resolve the issue. That means it is particularly important for you to take the necessary precautions to try and reduce the risk of becoming a victim of online identity fraud during tax season.
Beware phishers!
We all know about online scams but somehow getting an urgent email from the IRS can be enough to make you forget everything you have ever heard. Scammers regularly send out phishing emails warning individuals that they are being audited and asking them to confirm some key data, all of which is then of course used for the purposes of identity theft.
Never, ever be tempted to provide information via email – the IRS has confirmed it never uses this method to request personal data.
Don’t trust the mail either!
Having said that the IRS only correspond in the old-fashioned way, via the postal service, scammers also do the same. Therefore, getting a letter asking you to telephone with information or even post back your details might not be bona fide.
Do not provide any information until you have verified that the request is genuine by contacting the IRS directly. However, do not use the telephone number on the letter; find out the IRS number by going online. The number on the letter could also be a scam designed to appease suspicious individuals.
One other point regarding your mail: make sure you check it regularly. As technology advances we can all be a bit guilty of neglecting traditional ‘snail mail’ but this is the only way you will discover you have been the victim of identity fraud. Once the IRS identifies you as a victim, it will write to inform you – don’t risk staying in the dark longer than you have to.
Beat them to it!
One of the ways identity thieves manage to do so well is that they count on individuals not filing their returns until the very last minute.
If you file well ahead of time, you will not only avoid the stress, but you vastly improve your chances of getting in before the conmen.
Don’t be scared to check
If you visit the IRS website, you can order a copy of your tax return to make sure it matches your own records. Even if you have no reason to doubt, getting a copy of what the IRS hold on file isn’t a bad idea, just to make sure no errors have cropped up.
Although the chances are the IRS will spot identity fraud eventually, the sooner you catch it, the better your chances of minimising the damage.
Conclusion
Online tax returns provide identity thieves with a perfect opportunity. Try to make sure you take every precaution possible to prevent becoming the next victim: don’t carry your social security card, only enter your details onto website which are secure (they will begin with ‘https’) and think twice before using the services of a company you cannot verify the authenticity of.
Unfortunately identity theft is something which is here to stay but by taking some extra measures to look after your data, you can reduce your chances of being the next victim.
Bio: This article was brought to you by Arnold Hill the UK experts in inheritance tax planning.
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Category: Identity Theft, Taxes
