Warning: What You Can Do About Tax Return Fraud Right Now

tax return fraud

I’ll never forget coming home after a fun beach vacation and finding a welcome letter from Zales Jewelers in our mailbox. Zales wanted to thank my husband for opening a credit account with them and they thoughtfully offered a second card for my personal use.

Problem was, we had never purchased anything, ever, at Zales!

If you’ve ever been the victim of identity theft, you know the unsettling feeling of knowing someone out there is using your name, birthdate, and Social Security number to make unauthorized purchases. They have their crime honed to a fine art and they are difficult to catch.

I was surprised to learn that tax season presents yet another vulnerability to us consumers: tax return fraud Just a few weeks ago on my neighborhood’s forum, several residents complained about getting phone calls from someone claiming to be with the IRS. The person on the other line wanted personal information because, they said, the IRS was filing a lawsuit for past taxes!

In fact, the goal of these fraudsters is to get your Social Security number, in particular, so they can file a claim and, hopefully, get your tax refund! And, they can access your personal information in other ways besides a direct phone call.

You know that public wifi you use at Starbucks or Chick-fil-A? Shockingly, about 7% of folks who file their taxes online do so on a public wifi system, making it even easier for identity thieves to steal their information.

Sometimes we are so trusting. Too trusting.

These scammers use whatever personal information they can glean and then file a tax return, using your information! They make up details about your employer, deductions, dependents, income and more, and in some cases, just copy and paste random information into one return after another!

You won’t know if a false return has been filed using your name and Social Security number until it’s too late. Once your actual return has been filed, you’ll get a letter from the IRS, letting you know of a duplicate return under your Social Security number, or the letter may state that you received wages from an employer you’ve never heard of! The letter might even state that you have a balance due or that your account is now in collections.

All very unpleasant and unwelcome, to be sure.

Even those who are very diligent about checking their credit reports each year and faithfully reviewing bank and credit card statements may find themselves dealing with one fraudster after another. When a false tax return is filed, though, that puts the issue on a whole new level.

In February, 2016, a sophisticated attempt was made to generate E-file PIN numbers for stolen Social Security numbers. The criminals used malware, in this instance, and had over 460,000 Social Security numbers on hand. They were able to create PIN numbers for 100,000 of those! That’s a lot of innocent taxpayers being victimized on the IRS website, itself!

The IRS is aware of tax identification fraud and has taken steps to address the problem. You’ll notice new security requirements when preparing and filing your taxes online. That may not be enough, however. We’ve learned that the IRS sometimes has a hold time of more than 2 hours for phone calls. Last year, right around tax time, the IRS commissioner himself, admitted that the agency’s service was so bad that over 60% percent of phone calls went unanswered altogether.

Is there any way to protect yourself?

It doesn’t appear that we’ll be able to depend on the IRS for much substantive help when it comes to tax return fraud, and in many cases, there’s nothing the consumer can do to protect themselves. That leaves tax preparers on the front lines to battle this type of fraud.

In the case of Block Advisors, their Tax Identity Shield was established in 2015, specifically to address this growing problem. For taxpayers using Block Advisors to file their taxes, there is a small, additional fee for the protection that Tax Identity Shield provides.

This is a helpful service because too many of us are already bewildered by the most complicated tax code ever invented by humans, and tax filing season is already a highly stressful time of year. You may or may not even know that the IRS offers an Identify Protection PIN. This is one way to deter identity thieves, but getting the IP PIN isn’t a cut and dried process, since it depends on where you live and what kind of ID theft you’ve already experienced.

Tax Identity Shield can guide you through the process and, in fact, do the footwork for you, even before the actual filing of your taxes. Here’s what you can expect:

  • A security scan of your personal information to check for the potential of tax identity theft risk.
  • Personal advice throughout the year, along with tips and education to reduce the risk.
  • Help with obtaining an Identity Protection PIN from the IRS.
  • Early detection of any fraudulent returns in your name.
  • In the case of tax identify theft, give Block Advisors copies of any communications received from the IRS, and they will work with you through the process of getting your identification reinstated.

This yeear, Block Advisors is offering a nice bonus. Now, through March 31, receive an introductory offer of 50% off what you paid your tax professional last year. (Minimum $100 charge). This discount will offset the fee of their Tax Identity Shield, if you choose that protection.

Avoid tax return fraud with these steps

In the meantime, here are a few things you can do on your own to avoid becoming a victim:

  • Be highly skeptical of anyone calling or appearing at your front door, claiming to be with the IRS.
  • If you do get a phone call from “the IRS” check your caller ID. In some cases, these scammers can actually manipulate their identification to make it appear legitimate.
  • Run malware programs on all your electronic devices and install a good security software system.
  • File your tax return as early as possible to deter fraudsters from filing before you.
  • Read this IRS publication, “ Security. Together.”
  • Set up fraud alerts with the 3 major credit bureaus.

I never cease to be amazed by the criminal mind. I’m horrified by the thought of thousands of electronic scammers working tirelessly to steal from hard working Americans and when that money is a refund coming from the tax collection agency, money you overpaid, that somehow makes it even worse.

Please use the tips in this article to protect yourself, your loved ones, and your hard earned money.

Disclosure: BlockAdvisors compensated me for my research and for the writing of this article. 

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