Tax fraud remains one of the most common forms of ID theft
Though reports of individual cases of identity theft declined between 2017 and 2018 from 16.7 million to 14.4 million, it’s a problem that continues to plague consumers. Despite this decline in incidents, fraud victims are bearing a larger financial burden as they try to recover from the crimes committed against them. Millions are held responsible for some of the liability that arises from the fraud. For many consumers, this hurts their ability to pay their other bills which, in turn, hurts their credit.
Tax fraud is a top form of ID theft
Tax returns are one of the most common ways identity thieves target victims. According to the Insurance Information Institute, tax fraud ranked #3 in the top five forms of identity theft in 2018. The agency reports 38,967 consumers lodged a complaint of tax fraud in 2018.
ID thieves often use Social Security numbers (SSN) to file fraudulent tax returns and steal other people’s money. Or they may use a person’s SSN to get a job and use it to file their own tax return.
Signs of tax fraud
Unfortunately, tax fraud is a lucrative business for criminals. Hackers often sell information cheaply on the “dark web” to people who want to commit tax fraud or use someone else’s SSN. any victims don’t realize they’ve been targeted until after it happens. Here are ways victims commonly learn they’ve been defrauded:
- File a tax return and receive a message saying a return has already been filed with the SSN used.
- Receive a letter in the mail from the IRS indicating a suspicious tax return has been received.
- File a successful tax return but receive correspondence from the IRS indicating all taxable income hasn’t been reported to the federal agency as required (this signals an ID thief supplied their SSN to an employer).
- An online IRS account is opened without the taxpayer’s knowledge.
If you receive any indication your SSN was fraudulently used, take action ASAP to limit any damage caused by ID theft.
What else to watch for
If you receive contact from a person claiming to be an IRS representative and they use threats, intimidation, or demand immediate payment, this should be reported. The IRS will never:
- Ask taxpayers to wire money, use prepaid debit cards, or gift cards to pay tax.
- Request credit/debit card information over the phone.
- Reach out to taxpayers by email, text messages, or social media to discuss individual tax issues.
Always report unusual events to the authorities so they can take action. You can do this by contacting the Treasury Inspector General for Tax Administration at 1-800-366-4484, by visiting their website and by forwarding suspicious electronic communications to email@example.com.
Aside from dealing with the repercussions of ID theft, tax fraud often puts delays on expected tax returns. Tax thieves can also do serious damage to people’s credit standing. Also, remember, criminals don’t just commit tax fraud during tax season, they are at it year-round.
Whether you’ve been a victim of tax fraud, ID theft, or just have trouble with your credit standing, PRBC can help. Our alternative credit score enables people to rebuild their credit by simply paying the bills they’re already paying. To learn more about how we can help you improve your credit standing, contact us today.