According to the IRS, on Tuesday, hackers attempted to breach their computer systems in an attempt to file fraudulent tax returns. The thieves were attempting to gain access to E-File pin numbers which are used by some people to file their tax returns electronically. The IRS stated on Tuesday that approximately 464,000 social security numbers were accessed and nearly 100,000 of those were used to acquire E-file pin numbers.
The hackers apparently acquired personal tax payer data that was stolen from other sources to assist them in obtaining & generating the E-file pin numbers. The IRS is also reporting that no personal data was compromised or released in the attack. Tax payers who’s social security numbers may have been involved in the breach will be sent notifications by mail. The agency also noted that they are protecting the affected accounts by marking them to “protect against tax-related identity theft”. This is especially unnerving considering the IRS suffered an extensive data breach in 2015 in which over 300,000 taxpayers information was stolen, used to file fraudulent tax returns and obtain over $50 million federal funds.
If the IRS isn’t going to do something to protect your sensitive data, isn’t it time you took matters into your own hands. There’s no way you can protect yourself against a major corporate data breach like this one. Individuals who are notified that their information has been part of a data breach are 6 times more likely to have been a victim of identity theft in the past year.
This means that before you are even told that your social security number, credit card number or other personal information has been part of a data breach, the criminals have likely used your information fraudulently, without you ever even knowing. By this time, the damage has been done.
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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.
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.