As the time to file taxes quickly approaches, scammers are presented with a month-long opportunity that could result in identity theft or tax fraud. Now, more than ever, is a crucial time for taxpayers.
Documents needed in order to file taxes for 2015 should begin arriving in mailboxes because employers have to mail W-2 and 1099 forms by January 31, though banks and brokerage firms may have later deadlines. Since these documents contain your Social Security number and other sensitive information, they provide thieves with enough personal details to open fraudulent accounts in your name. Itâ€™s especially easy for thieves to follow postal carriers and steal from mailboxes in order to obtain these materials.
To keep yourself (and your mail) safe you can do simple things, like having a locking mailbox or post office box; being home to retrieve the mail adds some security. However, if these options donâ€™t apply to your situation consider asking a trusted at-home neighbor to collect your mail when it arrives or having it held at the post office for personal pickup. Pay attention to what expected tax documents have arrived and when; if you havenâ€™t received them by mid-February call the sender to inquire why. Should you learn that a document had been sent to you, but you never received it consider an immediate credit freeze.
By mid-February, your tax refund may have already been claimed by another kind of ID thiefâ€”mostly one who e-files a fraudulent IRS return under your identity. They donâ€™t need your tax documents because in order to file returns electronically all thatâ€™s required is a name, birth date, and SSN. Scammers are able to purchase that information on the black market for a little as $25.
The IRS begins accepting individual electronic returns on January 19, but employers donâ€™t have to provide the agency with correct employment information until March. Even though the agency may not match employer-provided data with consumersâ€™ tax returns they often issue 90 percent of refunds within 21 days of receiving e-filed returns. This allows scammers committing stolen identity refund fraud (SIRF, as itâ€™s called) the opportunity to make up fake W-2/1099 forms and other information. They then send it in to the IRS before the legitimate taxpayer has the time to file their returns and have the refunds electronically transferred to debit cards or delivered to addresses where theyâ€™re able to steal the refund out of the mail.
Most fraudulent claims are stopped, according to the IRS, but each year billions in refunds reach SIRF scammers. This year the agency has new initiatives and technology to combat tax-refund fraud and victims of these rip-offs eventually get their entitled money. However, the best way to combat these scams is to file your tax returns ASAP to prevent future identity theft and possible headaches.