Identity thieves can submit a fraudulent refund claim with a Social Security number and a few personal details. All they have to do is fill out a tax return, falsify a personís income and tax withholding and have a refund sent to a debit card.
Most refunds are issued quickly and often the victims will not discover that a refund has already been filed in their name until they try to file and receive a rejection notice. According to news reports, this type of fraud even happened to the U.S. Attorney General, Eric Holder, this year.
This method of tax fraud has become such a problem that the IRS, which named identity theft as the No. 1 tax scam for 2013,3 now has thousands of people working to investigate and help protect against it. For those who fall victim to tax-related identity theft, there is an IRS form to fill out Ė Form 14039 Ė and a special team that can be reached at 800-908-4490, extension 245.
Here are five tips from LifeLock on how to help reduce your chances of being a victim of identity theft this tax season.
Protect your Social Security number: Donít carry your Social Security card with you, and donít give out the number any more than absolutely necessary. If you are asked to provide it on a form, ask the company why they need it and whether you really have to share it, because this is often optional.
Shred personal documents: Use a quality ďcross-cutĒ shredder to destroy old tax forms, monthly financial statements and other documents that include your personal information. Or switch to online delivery, so that those documents do not end up in places where they can be stolen, like your mailbox or recycling bin.
Donít wait until April 15: File as soon as you can, so your return gets to the IRS before any fraudulent ones.
Do your taxes in a secure location: Itís wonderfully convenient to work from coffee shops, but when you are handling sensitive information like your taxes, make sure you are on a secure network where it is harder for thieves to capture the information you are sending back and forth.
Donít fall for scams: If someone calls or emails claiming to be from the IRS asking for personal information, donít provide it. The IRS says it only requests information by mail, so if you get an e-mail or text message that appears to be from them asking you to send back your personal details, it is probably fraudulent.