States Delaying Tax Refunds To Protect Against Fraud

In 2012, international hackers penetrated the South Carolina Department of Revenue system and gained access to nearly 3.6 million tax returns from as far back as 1998.  This was a wake up call, not only for the South Carolina government, but for the entire nation.  Since then, nearly all states have beefed up security surrounding their tax & revenue collection agencies and identity theft prevention has finally become a top priority.   This year, South Carolina and other states are implementing a new tax fraud detection process that will hopefully make it more difficult for criminals to file fraudulent tax returns using other peoples information.  Unfortunately, this is going to delay tax refunds to many Americans, which is likely to not be received warmly.

However, these identity theft protection steps are essential to protect individuals against, not only identity theft, but tax fraud and insurance fraud.  In 2013, the IRS identified nearly 3 million potentially fraudulent tax returns.  Nearly 5 billion dollars was paid out in fraudulent returns that year alone. That’s 5 billion..with a B.  You can read more about the South Carolina tax fraud situation here.

Thing to look out for this tax season.

Always ensure your tax documents are kept secure and under your control at all times.  They contain your social security number and other sensitive information that you don’t want falling into the wrong hands.

If you’re going to be mailing your tax preparation information to a CPA or service, drop your documents at the post office, instead of mailing directly from your home mailbox. This is much more secure and will prevent your information being compromised by mail theft.

If you receive an unexpected letter or notice from the IRS, this could be because someone else has already filed a tax return using your social security number.  Contact the IRS immediately at 1-800-908-4490 to determine if this is the case.  IRS agents will work with you to ensure you properly file your tax return and receive any refunds that are due.

The IRS will never correspond with you regarding identity theft via email or text. If you receive a suspicious looking text or email, it’s likely a tax fraud phishing scam.  Forward it to [email protected]

If you need a reasonable priced tax service that will get you all of the refund to which you’re entitled, I always recommend H&R Block.  They’re professional and affordable and can handle nearly any tax prep situation.  You can file online, fast & extremely simple.

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How Your Taxes can Help Identify if Your Identity has been Stolen

Even if you are incredibly careful and avoid tax scams like the societal plague they are, there’s still always a risk that your personal details can be stolen and used to commit tax fraud. However, if there is a silver lining to that situation at all, it is that it’s one of the easiest ways to find out that your social security number has been hijacked by some identity-theft criminal because you won’t be able to file your own return. The IRS will quickly send you word that you’ve already filed a return, and although the process of getting it all fixed is drawn out and nerve-wracking, the IRS will actually put a lot of effort into helping you get everything straightened out.

If you find your identity has been stolen and used for tax fraud, the IRS has advice you should be taking immediately:

Steps to take if you become a victim

  • File a report with law enforcement.
  • Sign up for a credit monitoring plan to receive alerts of additional fraud & watch your credit reports
  • Report identity theft at www.ftc.gov and learn how to respond to it at identitytheft.gov.
  • Contact one of the three major credit bureaus to place a ‘fraud alert’ on your credit records:
    • Equifax, www.Equifax.com, 1-800-525-6285
    • Experian, www.Experian.com, 1-888-397-3742
    • TransUnion, www.TransUnion.com, 1-800-680-7289
  • Contact your financial institutions, and close any accounts opened without your permission or tampered with.

If your SSN is compromised and you know or suspect you are a victim of tax-related identity theft, take these additional steps:

  • Respond immediately to any IRS notice; call the number provided
  • Complete IRS Form 14039, Identity Theft Affidavit. Use a fillable form at IRS.gov, print, then mail or fax according to instructions.
  • Continue to pay your taxes and file your tax return, even if you must do so by paper.

Click here for the full guide from the IRS

6 Scams To Watch Out For This Tax Season

Soon the time for you to file your taxes will be here and with it, more opportunities for tax and IRS scammers to steal your identity However, you cannot just ignore your tax obligations; otherwise, you’ll end up facing more serious issues. So how do you make sure that you won’t be one of the victims of identity theft and tax scam? Here are some helpful tips for you.

Avoid opening email links

Perhaps, you have been receiving emails that carry the name of IRS asking you to update your IRS accounts by simply clicking particular links therein. If until now you aren’t clicking such links, that’s good for you. Never be tempted to open those links. They are part of tax & IRS scams. Remember that the IRS will never contact you through emails. In such a case, it is best to forward the email to the authorities.

Be cautious of who prepares your taxes

During tax season, fraudsters are out to victimize anyone they can. What makes it difficult for some tax-filers to avoid becoming the victims is that these criminals appear to be legitimate professional tax preparers. Not only that, they are quite witty when it comes to tax-related matters. However, you can completely get rid of their schemes if you will only entrust your tax issues to reputable tax professionals. Preferably, go to tax preparers that have office and which operation is duly recognized by the IRS. Ask for their details and verify the legality of their operations with the respective government agencies.

Remember that you can ask for appeals from the IRS

It is true that you are obliged to fulfill your tax responsibilities. However, you should also remember that the IRS gives you an opportunity to make an appeal. So, if someone has been inappropriately demanding you to pay your taxes as early as possible, it can be a scammer who is very much eager to get your money.

Remember that the IRS only has a standard manner of accepting payments

Never risk your money or confidential information to a caller who introduces himself as someone that comes from the IRS or any collection agencies, unless you have already verified it with the authorities. If the person wants you to do the payment in manners that are not under the process of the IRS, there is a big possibility that you are communicating with a scammer. Contacting ftccomplaintassistant.gov and reporting the fraudulent call is the best thing you should do.

Ignore threatening emails or calls

One of the most effective tools of identity thieves is inflicting fear to their prospective victims. They would always try to use it to their advantage. At times, they would call you saying that you are in great danger of being arrested for something that sounds really connected to you such as matters related to your taxes, insurance, licences, and more. Never allow intimidation to confuse you to decide to pay out your money or to surrender certain essential documents. Make it a point to pause and communicate with the authorities. This way, you will be able to verify if you really have to respond to the matter.

Be watchful of ‘charity scams’

The season for filing taxes is also the season for identity thieves to disguise like a true representative form a charitable institution. For example, one would introduce himself as a director of a particular orphanage and ask you for donations that can be deducted to your tax. If you fall into this tactic, you will be handling some essential identifying information to the id thief, which will make filing of tax returns under your name (but beyond your knowledge) possible. Avoiding this is as easy as not entertaining such calls or emails. If you are really eager to make donations, conduct a research on charitable institutions and donate in the most secure way.

In the event that you are still apprehensive of being victimized by tax scammers and identity thieves, signing up for credit monitoring services can help you obtain the security that you are aiming for.