With another tax season coming up quickly, Better Business Bureau of Minnesota and North Dakota ® (BBB) warns taxpayers about tax-related identity theft, which occurs when someone uses your stolen Social Security number (SSN) to file a fraudulent tax return and claim your refund. Though this type of fraud is tough to prevent against – beyond taking steps to safeguard your personal information – BBB offers some tips to help consumers recognize when it’s occurred and steps they can take to mitigate the situation from there.
According to CNBC, tax-refund fraud is expected to total $21 billion in 2016. This type of fraud often occurs without the victim knowing it, until they file their tax return and discover that a return has already been filed using their Social Security number. Another way people learn they’ve been victimized is when the IRS sends them a letter saying they have identified a suspicious return using their SSN.
“Various criminal operations have begun focusing their resources on tax refund fraud, which has become a lucrative illicit enterprise,” said Dana Badgerow, president and CEO of BBB of Minnesota and North Dakota. “The IRS is taking increased steps to prevent this type of fraud, but this is an issue that will remain front and center going forward.”
BBB seeks to make people aware that this is a growing problem and one they need to be prepared for. Some ways to decrease your risk of becoming a victim of tax-related identity theft include: safeguarding your Social Security number and other sensitive personal information, and filing your tax return as promptly as possible. This year, the IRS has announced they will begin accepting tax returns on January 19. The filing deadline to submit 2015 tax returns is Monday, April 18, 2016, rather than the traditional April 15 date.
The IRS offers some additional identity protection tips for taxpayers:
• Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and will automatically update. Encrypt sensitive files such as tax records you store on your computer. Use strong passwords.
• Learn to recognize and avoid phishing emails, threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card provider or even the IRS. Do not click on links or download attachments from unknown or suspicious emails.
• Guard your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure. Treat your personal information like you do your cash; don’t leave it lying around.
Be alert to possible tax-related identity theft if you are contacted by the IRS or your tax professional/provider about:
o More than one tax return being filed using your SSN.
o Owing additional tax; your refund being offset; or if you’ve had collection actions taken against you for a year you did not file a tax return.
o IRS records indicate you received wages or other income from an employer for whom you did not work.
If your SSN has been compromised or you know – or suspect – that you are a victim of tax-related identity theft, the IRS recommends that you:
• Respond immediately to any IRS notice; call the number provided or, if instructed to do so, visit IDVerify.irs.gov.
• Complete IRS Form 14039, Identity Theft Affidavit, if your e-filed return is rejected because of a duplicate filing under your SSN or if you are instructed to do so. Use a fillable form at IRS.gov, print, then attach the form to your return and mail according to instructions.
• Continue to pay your taxes and file your tax return, even if you must do so by paper.
Visit bbb.org or click here for BBB tips on how to find a qualified tax preparer.
The mission of Better Business Bureau is to be the leader in building marketplace trust by promoting, through self-regulation, the highest standards of business ethics and conduct, and to instill confidence in responsible businesses through programs of education and action that inform, assist and protect the general public. We are open 8 a.m. to 5 p.m. Monday through Friday. Contact BBB at bbb.org or 651-699-1111, toll-free at 1-800-646-6222.