January 19th, 2016 signaled the start of every American's favorite time of year - tax season. Marked by dancing Statues of Liberty on street corners and tax preparation company commercials in abundance, tax season is a time of stress for many. Preparing and filing taxes is time-consuming and, no pun intended, taxing. However, there is a light at the end of the tunnel: nearly 8 out of 10 United States tax filers get a federal tax refund, according to 2015 IRS filing season statistics.
Unfortunately, this benefit has given rise to a new crime trend. The IRS reported 1.6 million cases of tax identity theft in 2013, and paid $5.8 billion in stolen tax refunds according to a study by the General Accountability Office (GAO). The increase in electronic filing has helped hackers file fraudulent returns, and another GAO report lists tax refund theft as one of the IRS' biggest challenges.
While tax identity fraud has increased over the past few years, the IRS is taking steps to combat the problem. The IRS suspended processing of around 4.8 million suspicious returns in 2015, and as of December had halted 1.4 million confirmed ID theft returns. In the meantime, taxpayers should take every possible precaution to prevent against tax identity theft. Some steps include:
· Filing taxes as early as possible
· Safeguarding all personal and sensitive information, including but not limited to Social Security number, address, phone number, birth date, etc.
o Being especially careful with personal information over the phone - the IRS will not call and ask for personal information on the telephone, and always communicates by mail first
· Check your credit report frequently
· Protect your online presence by using firewalls and appropriate security settings, and periodically changing account passwords
If you are the victim of tax identity theft, acting quickly is crucial. Report the fraud to the IRS Identity Protection Specialized Unit instantly, and begin gathering proof. Alert the credit bureaus, and closely monitor your credit reports.