Have you already started making plans for this year’s tax refund? I hope everything works out as you planned and that your refund isn’t snatched up by someone else.
MarketWatch says the Internal Revenue Service’s Identity Theft Protection Specialized Unit received about 450,000 cases last year — 78 percent more than 2011. The IRS also stopped $20 billion in fraudulent refunds in 2012.
Take a moment to reflect on the situation down here in the Sunshine State, where hundreds of millions of refund dollars have been taken by thieves in recent years.
I know personally of at least 10 cases where people went to file their return, only to find out that someone had beaten them to the punch — collecting a refund to which they were not entitled by using the victim’s Social Security number and name. All of the other information provided was false, but good enough to sneak right past the vigilant gatekeepers at Uncle Sam’s headquarters.
Wondering if you will fall victim to the stolen refund scam? Here are a few indicators that you may not be adequately protecting yourself.
1. You carry confidential documents with you
Perhaps you’ve carried your Social Security card in your wallet without thinking twice. Now’s the time to remove it.
Thieves need an address, Social Security number, date of birth and your full name to steal your identity and file a fraudulent tax return. By carrying the card around, you’ve just given them a piece of the puzzle.
2. You volunteer personal information to others
Identity thieves are quite clever and know exactly what it takes to swindle you right out of the information they need to perpetrate their crime. Don’t be surprised if in the coming weeks, you receive a call from someone claiming to be a representative from your bank or a travel agency with an account discrepancy or an irresistible offer that you can take advantage of if you just confirm a few tidbits of information.
Looking to really throw them off? Ask them for their direct line so you can hang up and call back. I can almost assure you that you will get the dial tone.
3. You don’t check your credit reports
If fraudulent items begin to appear on your credit reports, chances are your identity has been stolen. And some thieves will take things a step further and file a tax return in your name.
Remember, all they need is an address, full name, date of birth and Social Security number. And if they’ve already stolen your identity, they likely have way more information than they need.
4. You fail to secure confidential documents
Statements and even tax returns may be lying around the office or home, waiting for an opportunist to take advantage of your personal information.
You may be thinking that it won’t happen to you because you hardly ever have guests over, but what if your home were vandalized?
5. Your anti-virus protection is outdated
Leaving your computer unprotected is an open invitation to hackers to come in and wreak havoc. And surfing the Web without updated anti-virus protection is like riding a dirt bike down a steep hill with no helmet. I think you get the point.
6. You save confidential documents to your hard drive
What happens when someone asks to borrow your computer for a second or, even worse, your computer is stolen or hacked? Say goodbye to your confidential documents and your identity.
If someone is bold enough to steal your computer, what makes you think they’ll cut you any slack?
7. You choose to receive your refund by check
This was a major issue here in Florida. Crooks were stealing returns right out of people’s mailboxes or having fraudulent refunds delivered to addresses where they could conveniently pick them up.
In case you didn’t know, there are shady companies that will cash a fraudulent check as long as they can take a huge cut.
Save yourself the headache and opt to receive your funds via direct deposit.
8. You fail to pre-screen preparers to ensure they are reputable
Attracted to a tax return preparer by a guarantee that you’ll receive a refund? It’s time to evaluate how you select a tax professional.
Maybe they ask you to sign a blank form and they’ll “take care of the rest,” or they want to hold your refund in a “business account.” My advice: Run as fast as you can. And remember, once you sign on the dotted line, the responsibility lies in your hands.
My refund was stolen. Help!
If you take all the proper precautions, but still succumb to tax return fraud, take the following steps:
- Report the incident to the IRS. As soon as you realize that a fraudulent return has been filed in your name, call the IRS immediately at (800) 908-4490. You will also need to complete Form 14039, which is an identity theft affidavit. Keep in mind that it can take up to 180 days to resolve the incident, or even longer if the fraud spans a lengthy period of time.
- Retain a lawyer (if needed). Assuming a fraudster has stolen your identity and your property is at risk for seizure due to an outstanding tax bill, it’s best to retain a lawyer to represent you.
Finally, please note that the IRS does not reach out to individuals via electronic communication like email or text. Their correspondence is usually in written form.
Have you been victimized by tax refund fraud? Let us know in the comments below or on our Facebook page.