Yes, identity theft comes in many varieties. And now that tax season is starting, you need to be prepared for tax refund fraud.
And we don’t mean someone stealing your tax refund from your mailbox, though that happens, too. Someone taking your check from your mailbox is bad, but this is worse.
If a thief gets his hands on your Social Security number, he can file a tax return in your name.
From 2008 to May 2012, more than 550,000 taxpayers had their identities stolen by bad guys who used the information to claim fake tax refunds, according to the Internal Revenue Service (IRS).
The problem has also made the IRS’ annual “Dirty Dozen” list of taxpayer scams.
The IRS is working on the problem. It said from 2011 through October 2014, the agency has stopped 19 million suspicious returns and saved over $63 billion in fraudulent refunds.
So how does the fraud work? Once a tax refund criminal gets his hands on your Social Security number, he files a tax return electronically, and early in the filing season. That’s so the false return can get to the IRS before your real one does.
The perpetrator arranges for the refund to be electronically transferred to debit cards or delivered to addresses where the refund can be stolen from regular mail.
When the real taxpayer files his authentic return, the real headaches start.
Taxpayers who were due a refund are sure to see significant delays while the IRS investigates. And then they have to worry about who has their private information and how it might be used.
There are several signs that your tax return has been messed with, the IRS web site says:
• More than one tax return for you was filed;
• You have a balance due, refund offset or have had collection actions taken against you for a year you did not file a tax return;
• IRS records indicate you received more wages than you actually earned or
• Your state or federal benefits were reduced or cancelled because the agency received information reporting an income change.
If your identity has been stolen — even if you don’t think you’ve been a victim of tax refund fraud — be proactive and call the IRS Identity Protection Specialized Unit at (800) 908-4490.
You can also complete the IRS’ Identity Theft Affidavit, Form 14039, which will help you explain to the authorities exactly what’s happened to you, or warn them that you’re a potential victim because your personal information has been snatched.
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Notify the IRS if your identity is stolen.
Also be sure to file a report with the Federal Trade Commission and notify the three major credit bureaus — Equifax, Experian and TransUnion — and your local police department.
And finally, also notify the state’s Division of Taxation.
The IRS says it is working on ways to help victims.
It has issued approximately 1.5 million Identity Protection PINs (IP PINs), which are unique six-digit numbers assigned each year to identity theft victims to use when filing their federal tax return. The IP PIN will allow the taxpayers to avoid delays in filing returns and receiving refunds, the IRS said.
The pilot IP PIN program will continue into 2015 for residents of Florida, Georgia and the District of Columbia who filed tax returns in 2014. It’s also offering the program to another 1.7 million taxpayers in cases where IRS suspects fraud on their accounts, or for those who have been the victims of identity theft.
So if you’ve had an identity theft scare, start working on the proper notifications so you can protect yourself — and your tax refund.
Bamboozled often calls out companies and government agencies that make mistakes. Sometimes I make mistakes, too.
Monday’s Bamboozled column about restitution in the Daryl Turner travel scam case included a careless error, and I want to set the record straight.
A draft of the story had said that the Attorney General’s office had no comment about some follow-up questions. When the AG’s office did answer those questions, that information was added to the story, but I neglected to remove two paragraphs that had the “no comment” reference.
The mistake is entirely on me, and the Attorney General’s office did the right thing. I sincerely apologize for the error.
Have you been Bamboozled? Reach Karin Price Mueller at Bamboozled@NJAdvanceMedia.com. Follow her on Twitter @KPMueller. Find Bamboozled on Facebook. Mueller is also the founder of NJMoneyHelp.com.