Tax refund fraud has increased over 500% from 2011 to 2013
How does it happen?
Criminals across the country are electronically filing millions of fraudulent tax returns using stolen identities and EFINs (Electronic Filing Identification Number) to the tune of billions of dollars in fraudulent refunds paid by the IRS. Fraudsters use fictional data, including W-2 wages, to produce refunds on every return. Once filed, refunds are distributed via physical checks, direct deposit into a bank account, or, worst of all, nearly untraceable prepaid debit cards.
What happens to the victims?
Most often victims are alerted only when they attempt to file their own tax return. The IRS will notify the individual and the preparer that a return has already been filed under that social security number. The victim must file additional forms to prove the identity theft, and must often wait months for their refunds.
The Internal Revenue Service suggests the following practical recommendations to minimize your risk of becoming a victim of tax refund fraud:
- PROTECT your SSN. Provide it only when it is absolutely required.
- SECURE personal information in your home, vehicle and on your computer.
- CHECK your credit report every 12 months.
- DO NOT provide personal information over the phone or Internet unless you are sure you know who you are dealing with, and even then provide the least amount of information possible.
- USE firewalls and anti-virus software, and frequently change your passwords.
CALL the IRS Identity Protection Specialized Unit at 800-908-4490 as soon as possible if you believe you’re a victim of tax refund fraud.