The number of tax-related identity theft has been increasing and the IRS has been monitoring these tax fraud events. Tax season excites identity thieves.
According to Neil Chase, Vice President of Education at Lifelock that before you even file your tax return, a thief can do that beforehand using the important personal information and later on settle a fraudulent refund and leave you waiting for a longer period of time in claiming your own refund and resolve the issue.
The situation did not become better and it got worse. In the previous year, the IRS conducted at least 1,492 investigations related to identity theft. These scammers usually use the personal details they have stolen like Social Security numbers to access and collect a fraudulent refund. It was up to 66% in the year 2012 and an extremely high percentage of 400% in the year 2011.
Here are the different ways thieves use to steal your personal information and how to prevent yourself from experiencing this.
The IRS said last month that a nationwide phone scam hustled $1 million from the consumers and the agency called it the largest scam of its kind.
Part of the scheme is that the scammer pretends to be an IRS agent and will tell the consumer that they are obligated to pay taxes they owed to the IRS and that they need to pay it via wire transfer or a prepaid card.
Aside from fake calls, other forms of scam could be transacted via emails where they will ask for your personal information such as your Social Security number or birth date which they can use later to claim your tax refunds.
Be mindful and protect yourself from this horrible experience. The agency normally gets in touch with you through the mail and they will not ask you for any personal information may it be through call or email. If it happens that you receive something strange and anything questionable, feel free to reach out to the agency and have it verified whether it's fake or legit. So be careful of anyone who approaches you and claims to be from the IRS.
Be wary and don't just give your personal information to anyone. There could be bad employees could it be at the police department, at your dentist's office or even in school which is possible ways that your identity could be stolen.
Chase said that as much as possible don't give more personal information than what is needed and that every time someone asks you for it, you might as well ask them in return why they need it.
Not all tax preparers are reliable or can be trusted. Some of them are also scammers. To avoid this, you have to be careful of tax preparers who charge you an amount in reference to your expected amount of tax refunds and don't give them the liberty to have your refund be deposited in an account under their control instead of it be directly deposited to you.
To check if you have been scammed, monitor your bank accounts and credit cards on a regular basis and assess if you have questionable charges.
A data breach is when hackers break into a company's privacy wall and access confidential information of the customer which is becoming increasingly common.
Once the scammers acquire your private information then it is easier for them to file your tax return before you even do.
Consider signing up for identity theft protection or begin monitoring your accounts diligently if you believe that your information was compromised during a data breach. Also, if you were given questionable charges, at any rate, be sure to investigate it.
Chase said that a scammer, in the beginning, will try to make a smaller amount of transactions from the card they have stolen to verify if it is active and later make bigger transactions.
Since you have a high possibility of being targeted by scammers after a data breach, Eva Casey Velasquez, president of the identity theft resource center advises that you must secure a password with at least 8 characters that include upper and lower-case letters and add numbers to it.
These days, online is a common platform for identity thieves to fulfill their defrauding activities but other scammers still do the traditional scheme by breaking through mailboxes and steal mails and gather personal information they can use to file a tax return under someone else’s name.
Velasquez added that shred your important files that have your private information because identity thieves could go beyond digging in your waste bin just to get information though it may seem to be low-tech but still a convenient way for them to swindle.
File ahead of time. This is an easy way to prevent yourself from scammers. Identity thieves, we're able to claim fraudulent refunds because they have filed a tax refund before the customers do. In filing your tax refund early, the IRS will be compelled to track and investigate if there are second returns applied from the same applicant.
Tim Thompson CPA PLLC