Tax fraud is becoming widespread and is a form of identity theft. With tax season upon us, it is a good idea to take special precautions. The most common tax fraud this time of year is committed by perpetrators who use stolen identities to file tax returns in the hopes of collecting tax refunds. However, not all identity thieves have financial motives in mind. Stolen Social Security numbers are also used by perpetrators or others with questionable backgrounds to get a job.
Victims may not discover such theft until they see obvious wage discrepancies on their Social Security earnings statement, or they receive a letter from the IRS notifying them that more than one tax return was filed in their name. Stolen personal information such as a bank account, Social Security or credit card number is all a perpetrator needs to commit tax fraud.
The most common ways in which identities are stolen are through a lost or stolen wallet or purse, mail theft, documents retrieved from the trash; or through “phishing” scams—unsolicited emails from official looking businesses that request personal or financial information. The key to stopping identity theft is to protect your personal and financial information.
How to protect yourself:
Beware of any unsolicited correspondence that alleges to be from the IRS, especially if it comes over email, a social networking site or the phone. Perpetrators of these scams often use scare tactics to get unwitting victims to respond, such as informing them that the IRS is performing an electronic tax audit, or that their personal information is needed before a tax refund will be issued. The IRS never corresponds with taxpayers this way. Instead, they send out letters if such a notification is warranted.
When filing your tax return electronically, use a strong password to protect your file, and then remove it from your hard drive by saving to a disk or flash drive.
If you believe you have been a victim of tax fraud, or would like more information, including how to report identity theft or other fraudulent activity, go to the IRS home page at www.IRS.gov and click on IRS Identity Theft.