Avoiding Tax Fraud: Here’s What You Need To Know This Tax Season

Avoiding Tax Fraud: Here’s What You Need To Know This Tax Season

Tax fraud is on the rise. The total amount may hit $21 billion in 2016, up from “just” $6.5 billion in 2013, according to CNBC.

The Internal Revenue Service and states have invested in new technology to thwart the fraudsters this tax season. But, as security reporter Brian Krebs reports, identity thieves have already been testing those defenses.

LifeLock members who find themselves victimized can depend upon our restoration specialists to assist. And that’s a good thing—because tax fraud was the top type of identity fraud reported by our members last year, up 67 percent from 2014.

With tax season underway, and tax fraud heating up, we turned to LifeLock Marketing Intelligence Director Nada Baiz to answer a few questions on why we’re seeing such growth and what you—as a taxpayer—need to know this season to minimize your risk.

LifeLock UnLocked: Why do you think we’re seeing an increase in tax fraud?

Nada Baiz: Well, it’s relatively easy to file a fraudulent tax return. All you need is a name, date of birth and Social Security number. That’s it! All of the other details—address, employment and dependent information—can be made up by the criminal.

And with all the data breaches we’ve seen lately, criminals can easily put their hands on the necessary (sensitive) information needed to file a return.

LU: How do you see tax fraud continuing to develop?

NB: I believe it’ll continue to increase because criminals are realizing how lucrative and easy it is. And with chip-enabled debit and credit cards now making credit card fraud more difficult to commit, criminals will look to replace this lost “income” with something else.

LU: More people are turning to online tax preparation services to submit their taxes. Is there a correlation between using these online services and the increase in tax fraud?

NB: Technology makes it easier for individuals to file their own tax return. But it also makes it easier for criminals. Using an online service to fraudulently file taxes makes it easier for criminals to hide their identities and harder for police to find them.

LU: Is tax fraud more prevalent in certain demographics than others?

NB: People who file late are more susceptible. And unfortunately, they typically don’t realize they’re a victim of fraud until the criminal has already received the victim’s refund.

One group that traditionally files late is military in combat. They don’t have to file tax returns until 180 days after leaving the combat zone. Criminals know this and will aim to file a fake return before the military member files his or her real one.

LU: Do people seem to be aware of tax fraud? And what preventive measures can people take?

NB: Tax fraud isn’t typically top of mind for people. And unfortunately, many aren’t aware of how easy it is to file a fraudulent tax return. The best preventive measure is to beat a criminal to it—file your taxes ASAP.

LU: What services does LifeLock offer to help victims of tax fraud?

NB: When you’re a victim of credit card fraud, you simply call your bank and resolve the issue in a matter of minutes. Unfortunately, resolving tax fraud isn’t as easy. It can take months to years to finally receive your return, and it can often require a lawyer or IRS specialist to help sort things out.

LifeLock has an experienced restorations team that can act on your behalf. If needed, we’ll also hire and pay for a lawyer or an Internal Revenue Service specialist to help resolve a member’s tax fraud case.

For more insight on tax fraud and tips to avoid it, visit the Identity Theft Resource Center and Internal Revenue Service websites.

 

 

 

 

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