Tax refund fraud is on the increase. Taxpayers caught in these scams often spend months trying to resolve the problem and get the refund they deserve. Authorities suspended some state electronic tax filings (federal returns were unaffected) at the beginning of February in response to a flurry of fraudulent returns. The FBI is involved in investigating the situation.
What’s the Problem?
In these recent cases, cyber criminals are using someone else’s Social Security number to file a tax return seeking a refund. The fraud usually is discovered only after the taxpayer files a legitimate tax return and discovers an earlier return has been processed without the taxpayer’s knowledge or consent. To date, the problem appears to be confined to state tax returns. It is thought that some 18 states have been affected by this fraudulent scheme. Initially, some state Tax Commissions were concerned that the security breach might have involved popular consumer tax software programs, but it is thought now that the problem is not confined to specific tax filing software. The federal government has been busy tackling cybercrime, too, and has developed additional security measures to protect taxpayers. Last year, the IRS intercepted more than 3.5 million returns that involved stolen personal data.
Protect Yourself
Despite the increase in fraudulent returns using stolen data, tax authorities still recommend
e-filings. Here are some steps you can take to minimize your chances of falling prey to online identity theft.
Treat your tax filings with as much care and security savvy as you use in other areas of your personal and business/financial dealings. Shred confidential documents, store sensitive information in locked files and keep your computer system’s virus and anti-malware programs up-to-date.