Tax Season Theft & Fraud

Tax season seems to be one of the most stressful times of the year. Not only is there a lot of paperwork to prepare, but now we have the added fears of fraud and identity theft. This year, we’ve already seen a significant increase in fraudulent filings, and tax identity theft is one of the most difficult to detect. Usually, the only way you know a crime has been committed is when you attempt to file a legitimate tax return. Instead of receiving anticipated refunds, though, you receive a notice that a return has already been filed under your Social Security number.

In 2014, 34% of calls to the Identity Theft Resource Center involved government identity theft. This is a very specific type of identity theft, as it can encompass any scenario involving using someone’s information to gain government services, benefits, or filings. This type of crime can be anything related to government-overseen services, such as filing a fraudulent tax return with a stolen Social Security number, trying to get a job using someone else’s information, applying for any kind of government issued benefits, and more.

Like most forms of identity theft, you usually have no immediate way of knowing it occurred, giving the thieves a quiet head start. But unlike financial identity theft in which you receive a suspicious-looking account statement within a month or two, government identity theft can remain undiscovered until such time as you file for benefits or file your tax return, and you only learn about it months or even years after your data was stolen.

There are a few steps that consumers can take to reduce the risk of tax identity theft. The first step in limiting any kind of identity theft is always to safeguard your information as much as you can, while the next step is to be on the lookout for any unusual activity. Your Social Security statement, any medical statements or benefits reports, and even your annual W-2s can show you that someone is using your information for fraudulent purposes, but you have to stay on top of it in order to be aware. Report any strange activity immediately by contacting the Social Security office, the IRS’s fraud investigation department, or other pertinent government agencies.

Next, file your tax return as early as possible. Now is the time to begin gathering your necessary paperwork and filing documents so that you can submit your return as soon as possible, beating a thief to the punch. If you wait until the filing deadline and then discover that another claim has been filed under your Social Security Number, it becomes your burden to prove that the scammer is not, in fact, you. Not only is this a major problem to deal with, but if you count on the refund as part of your income, the delay will affect your ability to pay bills and routine expenses.

If you suspect that someone has fraudulently filed a return using your information, you can contact the IRS directly to report the crime by filling out Form 14039, Identity Theft Affidavit. You can also contact the IRS’s Identity Protection Specialized Unit for assistance.