A tremendous amount of attention has been paid by the media recently to credit and debit card cyber hackers. But the truth is that more criminals are using stolen personal information to file fraudulent tax returns and receive tax refunds. To do so, all a thief needs is your name, Social Security number, date of birth and falsified W-2 information. Criminals have been so bold as to steal W-2’s right out of victims’ mailboxes. And it may not matter whether you e-file or paper file as both methods can be compromised.
According to the Federal Trade Commission, in 2014, tax-related fraud was the number one consumer identity-theft complaint, accounting for 32.8% of all grievances. In fact, this is the fifth consecutive year that tax fraud has topped the list. To make matters worse, the FTC has seen a significant jump in complaints (16.4% of all complaints) involving callers posing as IRS agents who claim that the taxpayer owes money. When threatened with arrest or legal action, many taxpayers are coerced into wiring funds or loading money on to their prepaid debit cards. Nearly half of all filed complaints relate to some form of tax fraud scam.
If you e-file and your identity has been stolen, your return will be rejected by the IRS. If you originally mailed your tax return, you will receive a notice in the mail from the IRS stating that someone has already filed using your Social Security number.
Do’s and Don’ts to Avoid Being a Victim and To Minimize the Damage if You Become One
- File early to stay ahead of scammers
- If using a paid preparer, choose carefully
- Know how the IRS works. The IRS does not initiate contact with taxpayers by email or social media to request personal or financial information
- Only share your Social Security number when absolutely necessary
- Never carry your Social Security card in your wallet or purse
- Store your personal information in a secure location, such as a fireproof safe
- If e-filing your own return, ensure that your computer has the most up-to-date anti-virus software and that you have a secure connection (not a public Wi-Fi connection). Also, don’t file from a link in an email purporting to be from the IRS
- If paper filing your return, mail it from the post office or another secure carrier. Don’t leave your return or other sensitive postal items in an unlocked mailbox with the pickup flag up
- Review your credit card and bank statements on a periodic basis and immediately report any suspicious activity
- If you are a victim, act fast –
o Alert your financial institutions and credit reporting agencies to the fraud immediately to prevent thieves from opening new accounts (thieves will most likely not limit their schemes to your tax return)
o Contact the IRS Identity Protection Specialized Unit at 1-800-908-4490 and report the theft
o Fill out IRS Form 14039, the Identity Theft Affidavit, available at IRS.gov
o Consider –
- Filing a police report
- Filing a complaint with the FTC
- Placing a fraud alert on your credit report account
- Monitoring your credit reports for unfamiliar accounts or activity
o If you attempted to e-file and it was rejected, you will need to paper file and mail your return instead. Once you become a victim of identity theft, it may take up to six months to receive your refund
o Obtain an Identity Protection PIN from the IRS. This is a six-digit number created for eligible taxpayers to help prevent future fraudulent use of your Social Security number. Once you have a PIN, you will need to use it to file future returns or they will be rejected.
- If you have been a victim of identity theft, the IRS will send you a notice, inviting you to apply for a PIN
- If you live in states with a high incidence of tax return fraud such as Florida, Georgia or the District of Columbia, you may apply on your own
For more information on Tax Fraud or another area of accounting, please contact Victor C. Belgiorno at 516-861-3704 or or Bob Jahelka at 516-861-3707 or .