January 29 was the first day that the IRS would officially accept tax returns this year. With all of the data breaches that occurred in the past year, this may be the year that you will want to file early and to take some extra precautions.
Filing early has a number of benefits. You know what you owe or get your refund quicker, you avoid late filing penalties and you have a chance to review your withholdings for 2018. But the most important benefit may be preventing a fraudulent return from being filed in your name.
The IRS and FTC are teaming up to get the word out this week, Tax ID Theft Awareness Week.
With over 1500 data breaches in 2017, exposing over 179 million consumer records, the IRS is bracing for a potential increase in fraudulent filings this year.
Stolen identities are sold online for around $20. One easy way to monetize a stolen identity is to file a fraudulent tax return using the victim’s name and social security number. Crooks use fake income and other data to ensure the return earns them a nice refund in your good name.
The average tax refund in the United States is around $3,000. Spending $20 to make almost $3,000 is simple math for a criminal.
In 2015 alone 1.5 million illegitimate returns, claiming over $5 billion in fake refunds were filed.
Once a tax form is filed under your SSN or Tax Identification Number (TIN) the IRS will not accept a second filing. So if criminals file “your taxes” first your legitimate refund will be delayed. In the past it has taken an average of 278 days to resolve a claim and receive your refund. The IRS now aims resolve claims in around 180 days. That is still 6 months without your tax refund.
Typically consumers only learn they are a victim after it is too late. A letter explaining that two returns were filed using their social security number arrives after the second return is filed.
Last year the IRS stopped 787,000 phony tax returns, totaling $180 million in phony refunds from being filed and they are continuing to develop tolls to combat fraud. New for 2017 filings they have introduced a program where some employers will be adding verification codes to W-2 forms in box 9. This helps to prove the W-2 filed with the return is legitimate.
Filing early is your best defense. W-2s, 1099s and other important tax documents should be arriving in the mail or online soon. Gather the information needed and file as soon as possible.
When working with a professional tax preparer always make sure they have an IRS issued Paid Preparer Identification Number (PTIN). Never sign a blank return and make sure you get a copy of the return you signed from the service provider.
Some options to help you file now:
- Take advantage of free and trustworthy tax help. If you make less than $54,000 per year, you probably qualify for free in-person help through Volunteer Income Tax Assistance (VITA) Programs. These programs are staffed with IRS-certified volunteers who will help you file and get the refund you deserve. To find a local VITA click here.
- File for free with IRS Free File. If you make less than $66,000 per year, you qualify for online help through the IRS’s Free File program. This program allows you to use free, name-brand tax filing software for your federal return. For more info: https://www.irs.gov/uac/free-file-do-your-federal-taxes-for-free
Online Tax Filing tips:
Also keep some online safety and data security tips in mind when you file online.
- Make sure all software is up to date before you get started.
- Don’t fill out online tax forms over a public WiFi hotspot. Cybercriminals can intercept that traffic.
- Make sure you are using a secure https site to file forms.
- Use strong passwords and Lock Down Your Login
- Don’t fall for phishing emails after you file. Be wary of any email claiming you need to click a link and submit more info to finalize your return. Also watch out for emails asking for prompt payment to the IRS via gift cards or wire transfers.
If a you believe you are a Tax ID Theft victim:
- File a police report at your local police department.
- Contact the IRS immediately, even if you don’t have any evidence that it has affected your tax return. You can call the IRS Identity Protection Specialized Unit (IPSU) at 1-800-908-4490.
- File an ID Theft Affidavit: You can document the identity theft by submitting a police report and the IRS ID Theft Affidavit (Form 14039)
- Contact your state tax organization: Your state taxes may be affected as well.
Not only will this help in processing your current year tax return, once you have filed this form, every year thereafter the IRS will issue you an IP-PIN. This number will be required for the IRS to accept your return.
A credit freeze will only protect a criminal from establishing credit in your name. Learn more about Identity Theft here.