The holiday season is just getting underway, a time dedicated
to finding the perfect gift for loved ones and a steady procession of festive
events that ends when we ring in the New Year. Unfortunately, it is also a busy
time for the commission for tax fraud related to identity.
I’ve written more extensively about this issue in my bookSwiped: How to
Protect Yourself in a World Full of Scammers, Phishers, and Identity Thieves, but there are
a few points that bear mention this month. Among the different tax-related
identity crimes discussed in Swiped, I checked one of the main reasons for this
crime is increasing: information violations. Before we go any further in our
consideration of the above, it’s important to drive home the one lesson to be
learned here (there is only one): Tax fraud is on the rise. Tax refund fraud
losses are estimated to reach $21 billion by 2016, according to the Treasury
Inspector General for Tax Administration.
The
fact that you have not yet been a victim of identity-related tax fraud may not
have much to do with your efforts to stay safe. In fact, it might be nothing
more or less than dumb luck. We’re looking at a numbers game in the evolution
of this particular identity-related crime. With more than a billion records
“out there,” it is possible that the only reason you have not been victims of
the bad guys did not get around to you.
The
major data breaches at Anthem and Premera exposed 91 million Social Security
numbers. In just those two compromises, hackers gained access to all the
personally identifiable information one would need to commit tax identity theft
for many years to come. While it might be comforting to say these breaches
represent the main threat, it would also be inaccurate. Just because your
information is not leaked in violation of the above does not mean you are safe.
How to secure your tax refund
The
number one way to avoid getting “got” by identity-related tax fraudsters is to
file early and beat them to the punch. The sooner you get your tax return to the IRS and your state, the better. Until the government
creates better safeguards, rapid provision of information is the best measure.
What If You’ve Already Been Scammed?
If
you have become the victim of tax fraud, my book has a checklist of things you
can do to safeguard yourself from subsequent problems. Here is one of these you
need to do.
1. Request a fraud
Contact one of the three major
credit reporting agencies — Equifax, Experian, or TransUnion — and ask that a
fraud alert be placed on your credit records.
Report the Crime
Calling the FTC Identity Theft Hotline at 1-877-438-4338 or File a report
with your local police and file a petition with the Federal Trade Commission at
www.identitytheft.gov
3. Consider Enrolling in a credit
monitoring program
You might wish to purchase a combination credit and
fraud monitoring service, which provides instant
alerts whenever anyone attempts to open a credit account in your name. This
tracking is an effective way to fraud alert.
4. Request assistance from IRS
Call the number provided on the IRS notice informing you
of the fraud. To clear your tax record, complete IRS Form 14039, Identity Theft
Affidavit. You can use a fillable form at www.IRS.gov, print it, then mail or
fax it.
Close account immediately fraud
Close any credit or financial accounts have been tampered
with by a thief or opened without your permission.
6. Pay your taxes
Be sure to continue to pay taxes and file your tax return
on time, even if you must do so by mailing in paper forms.
7. Vigilance
You have to assume that if someone has
enough of your personal information to file a tax return, they have more than
enough information to commit other forms of identity theft. Read every
explanation of benefits statement and be sensitive to any communication you may
receive from a debt collector.
8. Stay Diligent
If you contact the IRS about ID theft taxpayers and not
get a resolution, contact the Identity Protection Specialized Unit at
1-800-908-4490 for your case.
