The dreaded April 15 deadline is creeping up. Many who owe taxes and wait until the last minute may be in for a big surprise in the form of an IRS letter stating that the taxes have already been filed and a refund has already been collected.
How is this possible? Unfortunately, it means you are a victim of tax identity fraud, and clearing up this mistake is going to cost you plenty of time and aggravation. The average tax fraud incident takes the IRS eight months to a year to straighten out. According to the Treasury Inspector General for Tax Administration report, 125 million tax returns were filed online in 2013. That is almost double the amount filed in 2012. It’s not surprising that 93 percent of all fraudulent tax returns are filed online. Criminals gain personal information to commit identity theft in various ways to file fraudulent tax returns. They have developed different strategies to manipulate tax returns, including:
- Filing a return in a child’s name.
- Submitting taxes for someone whose income doesn’t merit a return.
- Filing under the names of deceased individuals.
- Prisoners filing fraudulent tax returns (more every year).
- Electing to receive returns on pre-paid cards that are then turned into cash.
- Compromising legitimately filed returns online by stealing associated names, Social Security numbers and banking information.
- In the first half of 2013 alone, 1.6 million taxpayers were affected by identity theft.
- The IRS gave away nearly $4 billion in fraudulent tax refunds in 2012 according to a 2013 report by the Treasury Inspector General.
If you wait until the last minute to file your taxes, the odds of becoming a tax identity fraud victim grow. If you discover someone else has illegally filed a return in your name, you will be left to deal with the hassle of reporting the crime to the IRS, filing a proper return and protecting your data and identity from fraudulent use.
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