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Protect Yourself from Tax ID Theft
Although the Internal Revenue Service (IRS) has stepped up efforts to spot fraudulent tax returns filed by thieves, expect an explosion in tax identity theft – and know that the burden falls on you to protect yourself.
According to ABC News, IRS investigations of tax-related identity theft are up 66 percent since 2012 and the agency says it has identified 14.6 million false returns, stopping $50 billion in fraudulent refunds. But the problem continues to grow and the boom has caught filers and tax experts off guard with scammers hoping to beat you to the punch and file before you do. They steal year-end statements, W-2s and other documents to file a return in your name. Their preferred method of receiving your refund is prepaid cards because they're just like cash.
Be on the lookout for any suspicious activity and know the warning signs to avoid becoming a victim:
- Monitor the Mail. Have you received your W-2, 1099, and other tax forms? Follow up with the financial institution if you haven't received the forms and ask when they were mailed. If you suspect fraud, call the IRS Identity Protection Specialized Unit at 800-908-4490, ext. 245.
- Ignore IRS Emails and Texts. The IRS does not use e-mails or texts to contact you, so don't respond. If you click on an attachment that claims to be from the IRS, it may contain a virus or take you to a fraudulent site. Forward suspicious e-mails to firstname.lastname@example.org.
- Watch for Pop-ups. When filing taxes online, be suspicious of out-of-place pop-ups or a slow-running computer.
- Secure Your Refund. Choose direct deposit to avoid lost or stolen checks.
- Send Your Return Safely. File online if you can. If you file by mail, never put your return in an unsecured mailbox, an office mailbox, or outgoing mail bin at work. The envelope says "tax return" and can easily be snatched. Take the return directly to the post office and use certified mail.
- Choose Preparers Carefully. Scammers may pose as tax-preparation companies offering to review your return for errors, but instead they steal your information and your refund. Verify the status of the preparer's license with the Better Business Bureau and the IRS. Don't sign your return if the preparer didn't sign it, or if the return is incomplete.
For more information, read these articles:
Uncovering Tax-Related Identity Theft (Federal Trade Commission)
Tax Identity Theft Tops IRS Tax Scams in 2014 (Huffington Post)
And see this important information for California residents:
Reporting Identity Theft in California