With tax identity theft becoming a more widespread crime, it’s important that consumers know how to reduce their chances of becoming a victim.
The IRS has reported a significant increase in the number of fraudulent tax returns filed, with 641,690 tax-related identity theft incidents from the first nine months of 2012, up from 242,142 total incidents in 2011 and 47,730 from 2008.
Tax identity theft occurs when an offender falsifies tax returns to get someone else’s refund check. Sometimes all it takes is a stolen Social Security number and a fake address. Victims don’t realize their refunds have been stolen until the IRS denies them their legitimate refund check.
“The best defense against identity theft of any kind is to be vigilant in the protection of your personal information,” said Trey Loughran, president of the Personal Solutions unit at Equifax.
“It can take many months for a victim of tax identity theft to finally get his or her rightfully owed refund check.”
Here are eight steps you can take to lessen your risk of becoming a victim of tax identity theft:
1. Protect your personal information by keeping important documents, like your birth certificate and Social Security and Medicare cards, in a safe place. Only carry these documents with you when it’s necessary.
2. File your tax return as soon as possible during tax season. If you file with the IRS first, the thief will be denied when trying to use your Social Security number for a fake return.
3. If you file your taxes by mail, take your tax return to the post office. Do not leave it in your mailbox, where it can be easily stolen.
4. Check with the Better Business Bureau to make sure your tax report is being prepared by a reputable business.
5. If you wouldn’t normally file a tax return, for example if you are a full-time student with no income, be wary of anyone who offers to prepare your taxes so you can receive a refund or “free money.”
6. Never sign a blank form that someone else will complete for you.
7. Watch out for scams. Remember that the IRS will never contact you through any form of electronic communication, like email, to ask for your personal information.
8. Check your credit report regularly. If your personal information has been compromised for tax fraud, identity thieves can also use it to commit other types of identity fraud, like opening credit card accounts in your name. You can request a free credit report each year from all three credit reporting agencies at www.annualcreditreport.com.
If the IRS denies your tax return because you have become a victim of identity theft, you can still get your tax return. File a report with the police, followed by the IRS Identity Protection Specialized Unit at 1-800-908-4490. Also sign an identity theft affidavit.
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