Tax refund fraud is a common scheme that fraudsters use to not only steal money, but also the identity, personal and financial information of U.S. taxpayers. By obtaining this information, scammers are able to falsely file a tax return and pocket millions of dollars in fraudulent tax refunds. The Internal Revenue Service (IRS) reported that identity thieves received an estimated $90 to $380 million in tax refund fraud in 2018 alone! It’s best to educate yourself on this type of scam in order to protect your identity and avoid having your tax refund stolen.
What methods do fraudsters use to gain Personal Identifiable Information?
- Phishing phone calls posing as the IRS
- Phishing emails or text messages appearing to be from a trusted source (i.e. IRS, your bank)
- Cyber fraud – hacking into tax filing systems or breaching databases
What are the signs of identity theft?
You may not know you’re a victim of identity theft until the IRS notifies you of a possible issue with your return. Be alert to possible tax-related identity theft and look out for:
- A letter from the IRS inquiring about a suspicious tax return that you did not file.
- Issues with e-filing your tax return because of a duplicate Social Security number.
- A tax transcript in the mail that you did not request.
- An IRS notice that your existing online account has been accessed or disabled when you took no action or a new online account has been created in your name.
- An IRS notice that you owe additional tax or refund offset, or that you have had collection actions taken against you for a year you did not file a tax return.
- An IRS notice that you received wages or other income from an employer you didn’t work for.
The IRS will NEVER…
- Initiate contact by email, text or social media to request personal or financial information or identity protection pins
- Call with threats of lawsuits or arrests
If you do receive a call, ask for the caller’s name, badge number and a call back number. Hang up and call the IRS at 1-800-366-4484 to determine if the caller is an IRS employee and contacting you for a legitimate reason.
Ways to Protect Yourself:
- Protect your SSN at all times. Don’t give it out unless you’re sure who you’re giving it to.
- File your tax return as early in the tax season as you can.
- Use a secure internet connection if you file electronically or mail your tax return directly from the post office.
- Research a tax preparer thoroughly before you hand over personal information.
- Check your credit report regularly to spot fraudulent activity and make sure no one has opened any new accounts in your name. Credit Sense is a free resource that allows you to instantly access your credit score and full credit report within online and mobile banking.
- Review your Social Security Administration records annually. Sign up for My Social Security at ssa.gov/myaccount/
- Avoid phishing scams by looking out for emails that pose as a trusted source (i.e. bank, tax provider) with an urgent message like “update your account now!” and/or instructions to open a link or attachment.
- Avoid Malware by never downloading software or apps from pop-up advertisements.
- Talk to your family about online security when using computers and mobile devices.
Social Security Number
If your Social Security number is compromised and you know or suspect you are a victim of tax-related identity theft, the IRS recommends you take these actions:
- Respond immediately to any IRS notice and call the number provided.
- If your e-filed return is rejected because of a duplicate filing under your Social Security number, or if the IRS instructs you to do so, complete IRS Form 14039, Identity Theft Affidavit. Use a fillable form at IRS.gov, print, then attach the form to your return and mail your return according to instructions.
- Visit IdentityTheft.gov for steps you should take right away to protect yourself and your financial accounts.
- See Identity Theft Victim Assistance: How It Works for more information about how the IRS can help you.
- If you previously contacted the IRS and did not find a resolution, contact 800-908-4490 for specialized assistance.
If you believe someone has filed a fraudulent return in your name, you can get a copy of the return. Follow the Instructions for Requesting a Copy of Fraudulent Returns.
If you receive an IRS Notice CP87A and are notified that one of your dependents has been claimed on another tax return or their own, it’s best to find out why someone else claimed your dependent. To learn more, review What to Do When Someone Fraudulently Claims Your Dependent.
Not all data breaches or computer hacks result in tax-related identity theft. It’s important to know what type of personal information was stolen. If you’ve been a victim of a data breach, keep in touch with the company to learn what it is doing to protect you and follow the steps for victims of identity theft. Data breach victims should submit a Form 14039, Identity Theft Affidavit, only if your Social Security number has been compromised and your e-filed return was rejected as a duplicate or the IRS instructs you to file the form.
Take Action if You Are a Victim
If you are a victim of Tax Refund Fraud, notify the IRS and your bank(s) immediately. Report any suspicious or unsolicited emails claiming to be sent from the IRS to phishing at irs dot gov.
For more tips to help protect your personal information, check out our other blogs on Privacy & Cybersecurity and visit the Lakeland Bank identity theft information center. If you believe your personal information has been compromised or you think you may be a victim of identity theft, we’re here to help! Contact us.