Tax Refund Fraud: Are you safe?

padlock-550691_640You may be vulnerable to Tax Refund Fraud. Learn how it’s done and how you can keep your money safe. According to ABC News and the Internal Revenue Service, fraudulent tax returns have been filed with the IRS since 2008. In that time, the numbers have increased from hundreds of people filing fraudulent tax returns refunds to thousands of people filing fraudulent tax returns refunds.

How does Tax Refund Fraud work? It’s simple.

  • Your identity is stolen
  • A bogus tax return is filed in your name before you file
  • A refund is issued to the identity thief within 7 days

How are stolen identities acquired?

Lists are purchased from people who garnered information from the Internet or through data breaches suffered by places like Home Depot and Target, or from people who work in banks, hospitals, schools and clinics. Who can turn down $1,000 for giving 100 names and SSN when they may be making minimum wage?

How are bogus returns filed?

Fraudulent tax returns are filed on many of the online tax preparation sites available. Bogus From W-2s are used to complete the tax returns. The identity thieves inform the IRS to where the “overpaid” tax should be refunded: An address, a bank account, or into a prepaid debit card. There is no need to go to the bank if they use a prepaid debit card purchased from Walmart or other merchant. These cards are undistinguishable from a legitimate bank account.

How quickly are these bogus refunds issued?

A refund can be issued to an identity thief with 7 days. The IRS estimates that it has sent out nearly three million fraudulent refunds last year costing the taxpayers (us) $5.2 billion.

How can you protect yourself?

The Upper Valley is not protected. According to the Valley Newsii, 180 people (in the medical field alone) in the Twin States had their identity used to file fraudulent tax returns. Use the checklist below to protect yourself from identity theft and tax refund fraud:

  • Keep your personal information your personal information.
  • Take care of what you post on the Internet
  • When making a purchase via the Internet, ensure the web address or URL (uniform resoure locator) starts with https. The “s” indicates it is a secured website.
  • Add identity theft to your homeowner’s policy. It us a little money for a lot of protection.
  • Contact your banker and change your credit and debit card accounts immediately if you suspect ID theft
  • View your bank account account activity often
  • Check your credit score at least annually
  • Have your mail delivered to a post office box rather than a mailbox at the end of your driveway or in a cluster at your condo or apartment complex
  • Shred or Stamp out identifiable information (See item # 42050-SEC-K)
  • When paying with a credit card, ensure your card is returned to you
  • File Form 14039, Identity Theft Affidavit, with the Internal Revenue Service
  • Do not answer e-mail from the IRS asking for your social security number or other personal information. They would not contact you via e-mail; besides, they already have it.

What to do if your identity has been stolen

  • Contact your tax preparer
  • Contact the IRS
  • Contact your local law enforcement agency