Tax day may be a date that few consumers look forward to. However, there is one group that uses the day to scam their victims: identity thieves.<\/p>\n
Tax ID fraudsters file early because they have a treasure trove of stolen personal information (names, dates of birth, Social Security numbers), and they\u2019re eager to use that information to steal other people’s tax refunds.\u00a0Tax identity theft is the use of someone else\u2019s personal information to file a fraudulent tax return or claim tax benefits. This fraud is particularly pernicious because the legitimate taxpayer may have no way of knowing that fraud has been committed.\u00a0The scam only works for returns that haven’t been filed by legitimate consumers, so fraudsters are highly motivated to file as early as possible.\u00a0Often, the fraud will only be detected when a taxpayer receives a notice from the Internal Revenue Service (IRS) or state tax authorities of a problem with her return.<\/p>\n
Tax identity theft was the single biggest type of identity theft complaints to the Federal Trade Commission in 2014. Conservative estimates put the cost of this fraud to the nation\u2019s taxpayers at $5.2 billion annually.<\/p>\n
Here\u2019s how tax identity theft works: Most workers receive their W-2 forms from their employers by the end of January. Since many consumers wait until April to file, a scammer who has access to compromised personal information (such as a Social Security Number, full name, and street address) can take advantage of the delay to file in someone else\u2019s name. Some tax ID thieves even specialize in using children\u2019s identities to fraudulently claim them as dependents. Since the IRS tries to process refunds in as little as three weeks, the scammers receive their fraudulent refunds in the mail or electronically and quickly turn it into untraceable cash. The legitimate taxpayer often only finds out they\u2019ve been a victim when the IRS refuses to process the real return because\u2014according to its records\u2014they\u2019ve already filed a return.<\/p>\n
Tax identity fraud is difficult to catch before the fraud occurs. However, consumers who fall victim to tax identity fraud often discover it in one of the following ways:<\/p>\n
If you receive one of these notices from the IRS or state tax authorities, contact the agency immediately. The IRS Identity Theft Protection Specialized Unit can be reached at 1-800-908-4490. A list of state tax authorities\u2019 contact information is available from the Federation of Tax Administrators\u00a0here<\/a>.<\/p>\n Unfortunately, there is no foolproof way of avoiding tax identity fraud. Since Social Security Numbers and other personal information are so widely available on cyber black markets, chances are that scammers already have the information they need to commit tax identity fraud against many, if not most, American consumers.<\/p>\n However, there are steps that can be taken to reduce risk to the extent possible. These include:<\/p>\n Identity theft is a serious crime that can significantly and negatively affect your ability to obtain credit, get a job, or obtain medical care, just to name a few results. Recovering from tax identity theft is not easy, but it can be done through a combination of quick action and careful follow-up. The\u00a0Internal Revenue Service<\/a>\u00a0and\u00a0Federal Trade Commission<\/a>\u00a0recommend the following step-by-step process for addressing tax identity fraud.<\/p>\nReducing your risk<\/strong><\/h4>\n
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What to do if you are a victim<\/strong><\/h4>\n
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