Tax season: not exactly everybody’s favorite time of the year, but for income tax fraudsters—it’s payday! Why? Because submitting fraudulent tax returns in your name and stealing the refund money is an easy thing to do. The W-2 form that your company just mailed to you isn’t even required. All fraudsters need is your Social Security number, name, and date of birth, then bingo. They can file your return and have it deposited onto a prepaid debit card, which is as good as cash. They walk away richer, and you’re left holding the bag.
So how does a tax-related identity thief get my information?
Even if you’ve been careful with your data, data breaches may have given identity thieves all they need to submit a fake tax return using your Social Security number. It’s not all “hackers in hoodies” stealing your data either. Some identity thieves stick to old tricks, such as “dumpster diving” where they go through trash bins behind businesses (medical and financial offices, hotels, etc.) to find paperwork with your information on it. One careless box of documents can be an identity thief’s treasure chest.
And when it comes to timing, when will I know if I’m a victim?
It’s impossible to know when you were victimized. A thief that steals your personal data may not use it immediately. Some criminals wait years, knowing that you’re not going to change your Social Security number. Think about it. If thieves steal your purse or wallet, they’ll know you’ll be on the alert for fraud soon after. But a year later? Probably not so much.
If you’re a victim of tax fraud, you won’t know until you get a rejection notice from the IRS, saying that you’ve already filed your tax return this year. You’re then stuck, trying to explain to the IRS all of that fraudulent data that the thief submitted in your name—with no return in sight for a while.
If I’m a victim of tax fraud, how else am I vulnerable?
It’s important to remember that if a thief can file a fake tax return in your name, it means they have your Social Security number too. With that, they can do even more damage than just stealing your tax refund. With enough of your data, a thief can contact the IRS to request an Identity Protection (IP) PIN in your name. The IP PIN is meant to prevent thieves from using your SSN for fraudulent tax returns, which is reason enough for an identity thief to try to create that account before you do.
So what can I do?
Tax fraud is an enormous problem in the United States. Its magnitude is a lot to take in. Fortunately, there are steps you can take to help protect yourself. Here are a few to get you started:
- Contact the IRS to see if you’re eligible for an Identity Protection PIN. The IP PIN is a six-digit code assigned to you by the IRS and helps prevent misuse of your SSN on fraudulent federal income tax returns.
- File your tax return early in the tax season. If you owe taxes, you can still file your return early and then wait to send your payment until April 15.
- Watch out for phishing emails. The IRS will never contact you by email, text, or social media. If the IRS needs information, it will contact you by regular mail.
- Don’t use public Wi-Fi hotspots to file your tax returns online. Just because a public Wi-Fi hotspot requires a password does not mean that your data is safe from an attacker on the same network.
- Securely store copies of your tax return, and shred draft documents and tax notes you no longer need.
- Monitor your credit cards for unauthorized charges, as well as your credit report for new accounts that you didn’t open. Fraudulent activity may indicate that you’re at higher risk of further fraud, including stolen tax refunds.
Posted by Joe Gervais, LifeLock security communications director