Steps taken by consumers may help protect from tax fraud identity theft as the 2016 filing season begins.
What is tax identity theft? How severe is the problem?
Attorney General Josh Hawley warns consumers to be alert for tax fraud identity theft as the 2016 tax filing season begins.
“Tax identity theft fraud has become all too common. Consumers should file their returns as early as they can,” Hawley advised. “Missouri consumers who experience tax fraud identity theft can reach out to my Office for help.”
Tax identity theft occurs when an identity thief uses a taxpayer’s stolen identity to file a fraudulent return. In doing so, the fraudster often claims a tax refund in the consumer’s name. The identity thief often files a return using a stolen Social Security number and other consumer information to file that forged return. When this happens, the IRS or Missouri Department of Revenue (DOR) may have to reject the real return filed by the victim because a return had already been filed using the victim’s credentials. In other scams, some tax thieves use children’s identities to fraudulently claim them as dependents on a return.
Sometimes, too, scammers will take over an online tax preparation software account which had been opened by the victim. If a scammer hacks an online electronic tax filing account that was created by the consumer, the hacker can redirect the refund to the thief’s bank account. Scammers may even create an electronic filing account with a tax preparation company in order to file the false return.
Although most workers receive their W-2 forms from their employers by the end of January, many consumers wait to file returns. A scammer who has access to your personal information can take advantage of that delay to file in your name. Because the IRS tries to process refunds quickly, the scammers receive their fraudulent refunds electronically or in the mail before you file.
Related scams include fake telephone calls in which the caller claims to be from IRS and demands a payment over the telephone for tax obligations which are not real. Consumers should call the IRS or DOR before providing confidential information or payment information on the telephone.
“The increase in a practice known as phishing could make tax refund fraud even more frequent this year,” Hawley said.
Phishing occurs when a criminal sends a fake email into a business or organization that asks for W-2s or tax information of employees. Companies should train their employees not to send tables of W-2 information or other tax information to anyone, even someone within the organization, without verbal confirmation that the email request for the information was real, according to Hawley.
In calendar years 2015 and 2016, DOR stopped over $100 million in fraudulent tax refunds. DOR also adopted new measures to assist taxpayers who wish to take additional security steps to prevent state filing tax fraud. You can click here to visit their website and get more information.
Additional information is attached below with information about how to learn whether you are a victim, consumer tips and steps to take if you suspect you are a victim.
How can I know if I am a victim?
Be alert to possible tax fraud identity theft if you receive a notice or letter that states:
- More than one tax return was filed using your Social Security number
- You owe additional tax or there is a tax refund offset
- Collection actions are taken against you for a year you did not file a tax return or did not owe money
- IRS or DOR records indicate you received wages from an employer unknown to you
- The IRS or DOR questions your claim information pertaining to your dependents
- When using electronic filing software, you are unable to process your return.
Consumer tips and information:
- File as early as you are able.
- Use only reputable electronic filing programs from respected vendors or tax return preparers.
- The IRS doesn't start contact with a taxpayer by sending an email, text, or social media message. They will not ask for personal or financial information in this way. If you get an email that claims to be from the IRS, do not reply or click on any links. Instead, forward it to email@example.com. If you receive an email or text that claims to be from DOR, do not reply or click on any links. Instead, contact firstname.lastname@example.org.
- If your income does not meet a certain threshold, you may not be required to file taxes. However, if someone else is using your Social Security Number to obtain employment and fails to file taxes, your account may be sent to collections. An unusual collection notice from the IRS may be a sign of identity theft.
- If someone uses your Social Security number to get a job, the employer may report that person’s income to the IRS using your Social Security number. When you file your tax return, you won’t include those earnings. IRS records will show you failed to report all your income. The agency will send you a notice or letter saying you received wages but didn’t report them. Contact the IRS or DOR and check your annual Social Security Administration earnings statement carefully. If there are earnings listed that you don’t recognize, someone else could be using your identity to obtain employment.
- Don’t routinely carry your Social Security card or any document with your Social Security number on it.
- Don’t give a business or medical provider your Social Security number just because they ask. Ask why it is needed and use another reference number if you can. Use your Social Security number only when absolutely necessary.
- Check your credit reports periodically.
- Protect your personal computers by using firewalls, anti-spam and virus software, update security patches, and change passwords for Internet accounts, especially tax electronic filing software and accounting software. Don’t use the same password for multiple accounts, especially bank accounts. Don’t allow anyone remote access to your home computer unless that person is known to you.
- Don’t give personal information over the telephone, through the mail, or over the Internet unless you have either initiated the contact or you are sure you know who is asking.
- Report suspicious online or emailed phishing scams to email@example.com. For phishing scams by phone, fax or mail, call 1-800-366-4484. Report IRS impersonation scams to the Treasury Inspector General for Tax Administration’s IRS Impersonation Scams Reporting. For suspicious contacts which you suspect might be DOR imposters, contact firstname.lastname@example.org.
Steps to take if you suspect you are a victim:
- If you think someone used your Social Security number for a tax refund or a job, contact the IRS or DOR immediately.
- If the IRS or DOR sends you a notice about a problem, contact the IRS or DOR immediately.
- If you suspect a tax return preparer filed a return or altered your return without your consent or you are seeking a change to your account, file a form with the IRS or contact DOR. The IRS will ask you to complete Form 14157 and Form 14157-A and mail it to the address shown in the Instructions.
- If you suspect that someone has taken over your electronic filing software account, please notify the Attorney General’s Office at ago.mo.gov.
- If your Social Security number is compromised and you suspect you are a victim of tax fraud identity theft, take these additional steps:
- For federal fraud, complete IRS Form 14039, Identity Theft Affidavit. Use a fillable form at IRS.gov, print, then mail or fax according to the instructions. You will be asked to send proof of your identity with your form.
- For Missouri tax fraud, report the incident to the Missouri Department of Revenue by completing Form 5593PDF Document, and then send a scanned copy of the form and required documents to the DOR at email@example.com. You may fax or mail the forms instead.
- File a police report with your local police department online or in person. You will need a copy of the FTC Identity Theft Affidavit, proof of the theft, a valid ID, proof of address, and the FTC’s Memo to Law Enforcement.
- File a consumer complaint with the Office of the Missouri Attorney General at ago.mo.gov and with the Federal Trade Commission at www.ftccomplaintassistant.gov.
- Continue to pay your taxes and file your tax return, even if you must do so by paper.
- Place a fraud alert with the three major credit reporting agencies. Consider placing a credit freeze. For more information, call 1-800-392-8222 or click here to learn more.
More information concerning identity theft and tax fraud identity theft is available online and a booklet for identity theft victims is also available.