Tax Refund Identity Theft: What You Need to Know

Tax Refund Identity Theft

Every year during tax season, millions of hard-working people file their tax returns in hopes of getting a much-needed tax refund. Many rely on that hard earned money to pay off bills. Unfortunately, tax refund identity theft has become so rampant in the last few years, that it now tops the Internal Revenue Service’s Dirty Dozen Tax Scams for 2014. Last year, the IRS detected almost 915,000 cases of identity theft. Generally, a thief will use another person’s social security number to file a fraudulent tax return. The victim usually discovers their information has been stolen once they file their return and realize that someone else already claimed a refund using their name.

Although the IRS has more than 3,000 employees working on identity theft cases and has trained more than 35,000 employees who work with taxpayers to recognize and provide assistance when identity theft occurs, everyone is a potential target of an identity thief. To reduce the risk of tax refund identity theft, the IRS offers tips to protect yourself and steps to take in case you become a victim.

Tips to help prevent tax refund identity theft

•    Don’t carry your Social Security card in your wallet or purse – or any other documents with your SSN or Individual Taxpayer Identification Number (ITIN) on it.
•    If you receive an unsolicited call or email from someone asking for your SSN, don’t provide it.
•    Check your credit report every 12 months.
•    Protect your personal computers by using firewalls, anti-spam/virus software, update security patches and periodically change passwords for Internet accounts.
•    Secure your personal and financial information in a safe place at home.
•    File your tax return as early as possible. The earlier you file, the more you help prevent a thief from using your information to claim a refund, as their return will not be processed if you already filed it.

What to do if you become a victim of tax refund identity theft

•    If you receive a notice from IRS and you suspect your identity has been used fraudulently, respond immediately by calling the number on the notice.
•    Even if you’ve been victimized, you can still get your tax return filed and receive any refund you are due, although the process will take longer. IRS specialists will also protect your IRS account from more fraudulent activity in the future.
•    If you didn’t receive a notice but suspect you’ve been the victim of identity theft, contact the IRS Identity Protection Specialized Unit at 800-908-4490.
•    Fill out the IRS Identity Theft Affidavit, Form 14039. You can mail or fax the completed form to the IRS.
•    In addition to contacting the IRS, file a report with the police and the Federal Trade Commission through its website or the FTC Identity Theft hotline at 877-438-4338.
•    Notify the fraud departments of the three major credit bureaus: Equifax, Experian and TransUnion.

Remember, although the IRS has increased its efforts to help prevent tax refund identity theft, there are some steps you can take to further reduce the risk of becoming a victim. The more caution you exercise, the more likely you’ll be able to receive your hard earned money with no hassles.

Have you ever been an identity theft victim?  Feel free to share your thoughts in the comments section below.