7 Tips to Reduce Your Family’s Risk of Tax ID Theft

Mom and Daughter Reviewing Tax Documents

Most people dread tax season. And today the fear of tax identity theft just adds to the stress of preparing your tax return. But, for identity thieves, tax season is a favorite time of year. Why? Because you and millions of other Americans alike will send confidential information over the Internet, via fax, and in the mail. As soon as the New Year celebrations end, your employer begins preparing, filing, and mailing W-2 and 1099 forms, and a whole slew of other tax forms that contain the sensitive data belonging to businesses and individuals that identity thieves love.

In 2020, the Internal Revenue Service (IRS) identified over $10 billion in tax and other fraud, a significant amount occurring during the COVID-19 pandemic. Thieves work around the clock to steal your name, social security number, or other Personally Identifiable Information (PII) and file a forged tax return in the hopes of getting a fraudulent refund. Typically, this happens earlier in the filing season.

Also in 2020, unemployment scams became more lucrative during COVID-19, as states experienced overwhelming benefits claims from millions of first-time filers. Adding to the chaos, scammers quickly took advantage of the perfect fraud storm, pilfering an estimated $36 billion in stolen unemployment benefits from at least 35 states. Many victims of unemployment fraud won’t find out about it until tax forms arrive for benefits they never received.

Identity thieves also target children’s social security numbers, as they are a “clean slate”, and you may be denied a tax credit because your child’s Social Security number has been attached to someone else’s tax return.

7 Tips to Reduce Your Risk of Tax ID Theft

Don’t leave yourself vulnerable to identity theft this upcoming tax season. Prepare ahead by following these crucial steps to protect yourself, your family, your assets, and your credit.

  1. File Your Taxes Early | Most people don’t know they (or their children) are a victim of tax identity theft until their tax returns are rejected for using duplicate/previously filed information. Fraudsters file early to beat legitimate taxpayers to the punch, and it can go undetected for months until the rejection from the IRS is received. This is a particularly popular way that identity thieves use children’s identities to claim additional tax credits.
  2. Never Send Sensitive Information via Email or Text | IRS scammers will often mask themselves with emails or caller ID that looks legitimate. They reach out to you and request personal information that will allow them to file a tax return on your behalf. Do not be fooled – the IRS never contacts taxpayers by these methods of communication.
  3. Confirm Any Requests for Information with a Phone Call | Although a notice in the mail may seem legitimate, it’s relatively easy for fraudsters to set up phony direct mail campaigns and victimize consumers. Always confirm any request by calling the IRS toll-free number: 800-829-1040.
  4. Choose a trusted and reliable tax preparer | If you or your tax preparer is filing online, make sure it’s through a secure connection.
  5. Hand-deliver or securely ship sensitive documents to your tax preparer | Make sure your tax documents, especially W-2 forms and other documentation containing your social security number(s), get into the right hands. Use Certified Mail or Signature Required to confirm the delivery of your documents at your intended destination.
  6. Fill out and submit an IRS Identity Theft Affidavit | IRS Form 14039Identity Theft Affidavit, is a fillable form on the IRS website and should be filled out if you try to e-file your taxes and they get rejected due to a duplicate filing. Fill it out, print it, attach the form to your paper return and mail everything into the IRS.
  7. You should check your credit report regularly, at least once a year | This year consider checking it during tax season.

Continue following Fighting Identity Crimes to get the latest breach and scam updates, ID protection news & tips from our industry experts!

Follow us on social!
Facebook | Twitter | LinkedIn 

 

Combating Tax Identity Theft: The IRS and the Taxpayer

Taxes Due Reminder

*Originally posted March 13, 2017. Updated February 28, 2020.*

Tax season, fraud, theft – oh my! 

Tax season is a notoriously stressful time. Between filling out the forms, paying taxes or waiting for refunds, the tax-filing process can seem endless.

What’s more concerning is that tax season is a holiday for identity thieves. Tax fraud and tax identity theft continue to be a significant problem for both the tax administration and American taxpayers alike. Whether it’s through data breaches, phishing emails, scams or simple social engineering tactics, criminals hope to obtain enough of your sensitive information so that they can fraudulently file your taxes before you do. Continue reading

Want to Keep Your Small Business Going Strong? Avoid Tax Identity Theft

*Originally posted March 21, 2016. Updated December 30, 2019*

As the calendar turns to another year, businesses and individuals will soon be facing the inevitability of yet another tax season. And, while filing taxes isn’t something entirely avoidable, the risk of business tax identity theft can easily be minimized. According to the IRS Security Summit, businesses small and large are ideal targets for data thieves every tax season due to their abundance of personal information that can be used to file fraudulent returns. With ever-changing tax reform and regulations, it may be hard for your company to keep up processes while ensuring all sensitive documents are secure. Stick to the following tax preparation tips to avoid letting business tax identity theft wreak havoc on your business: Continue reading

Refund Denied: What to Do if You’re a Victim of Tax Fraud

Rejected Tax Notice

Now that April 15th has come and gone, it’s still critical for you to stay vigilant and to keep a watchful eye for any suspicious activity that may signal tax fraud.  

Fraudsters have been busy, and may have already been working behind the scenes to steal your refund. The 2018 Consumer Sentinel Network Data Book classifies tax fraud as one of the top three reported types of identity theft submitted to the Federal Trade Commission. Continue reading