Income tax season starts Jan. 31 for individual taxpayers, and while many taxpayers might not be in a hurry to file their returns, it’s a sure bet that criminals are poised to push the send button and transmit bogus documents.
Using the victim’s Social Security number, they snag a refund before the legitimate taxpayer files.
A 2013 Treasury Inspector General for Tax Administration report found that while the IRS is stopping more fraudulent returns, it issued an estimated $3.6 billion in potentially bogus 2011 refunds.
The problem of tax-related identity theft continues to grow, along with identity theft overall. Take the recent Target and Neiman Marcus breaches.
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“There is nothing a large company can do to completely protect itself,” said Jonathan Bochese, an attorney at Jacksonville, Fla.-based Tax Defense Network, a tax resolution firm. “There are people out there trying to hack websites. If a database exists, someone can get into it.”
Likewise, although there are measures people can take to keep from becoming a victim of identity theft, there’s no way to completely remove the risk.
What’s a legitimate taxpayer to do? Beat the crooks to it.
“If you file your return as close to opening day as possible, it minimizes the chance the fraudulent return will get there first,” Bochese said. “The IRS will process the return they get first.”
Bochese said a mailed return can take 10 to 20 days to enter the IRS’ system, so e-filing is advised.
If the IRS becomes aware you have been a victim of tax return fraud, it will send you a letter, not an email. The IRS never sends emails, Bochese said.
The agency said this month it has ramped up its efforts to combat the problem by assigning more than 3,000 IRS employees to work on identity-theft related issues.