tax identity theftOn the heels of the holidays, Jan. 27 rang in everyone’s (least) favorite winter season: tax season. Although cozying up around your W-2s with accountants isn’t as beloved as huddling around a fireplace with family, stealing hard-earned tax refunds is an annual tradition that identity thieves can’t wait to celebrate. Jan. 27 to April 15 is open season on unlucky consumers that may not know they’re risking their private information. To protect you (and your refund), we’ll let you in on the most common tax identity theft methods used — and which mistakes tax identity thieves exploit.

What is tax identity theft?

Tax identity theft is the result of someone stealing your social security number to file a false tax return in your name. The thief hopes that they can file your return (or a phony one in your name) before you do and take your tax refund.

Is it different from other forms of identity theft?

Even if you’re careful about keeping your personal information and online identity secure, it’s easier to fall victim to tax identity theft than other types of identity theft. This is because someone only needs your social security number to commit tax identity theft — thieves can falsify the other information. Unlike stealing a credit card or gaining access to a bank account, tax identity thieves don’t technically need tactics like phishing for security question answers or your income forms like W-2s or 1099s (although this info would help them). Someone could even use your social security number to get a job and leave you to pay for their income taxes. The IRS wouldn’t know that you’ve never seen that employer, let alone those wages.

How do you know if you’re a victim of tax identity theft?

You can monitor your credit score and bank activity year-round, but you may not know you’ve fallen victim to tax identity theft until the IRS sends you a letter or rejects your return. Here are a few red flags from the IRS’ guide that may indicate if you’ve become a victim:

  • You receive an IRS letter about a tax return you didn’t file.
  • Your tax return e-file is rejected because of a duplicate social security number.
  • The IRS records income or additional taxes due to an employer you don’t know.
  • You receive a notice from the IRS about accessing or creating an online account in your name that you weren’t aware of.

Mistakes tax identity thieves hope you’ll make

Fortunately, tax identity theft claims have dropped over 67% from its peak in 2015, but the IRS reports that there were still 34,000 reported cases in 2017. In recent years, data breaches have resulted in identity thieves getting their hands on troves of social security numbers and personal data. Although it’s harder to track the stolen info’s source, here are the mistakes tax identity thieves are waiting for — and how you can keep your guard up.

Procrastinating

Identity thieves hope you get busy catching up after the holidays. They prey on the fact that you’d rather clean the gutters or work on your 2020 goals than file your tax return after a long workday. Filing your return may not be fun, but losing your peace of mind and reporting fraud alerts is even less fun.

Defense: File ASAP. Don’t wait until April. This is the first (and easiest) line of defense against tax identity theft. As soon as you get the paperwork, file your tax return. Identity thieves can’t file a false report if you’ve already sent the real thing in. The Social Security Administration requires employers to send W-2 forms to employees by Jan. 31, so ask your employer if you haven’t received it by Monday, Feb. 3.

If you’re expecting a tax refund, contact the IRS and your state tax agency 22 days after you file. It usually takes 21 days to process your tax return, so make sure there aren’t any hang-ups.

Not asking questions

The most common scams are via phone call or email with someone posing as an IRS agent. These IRS imposters may pretend to be protecting your account, and will ask you leading questions to obtain personal information like security answers or your social security number. These scammers hope you don’t know that the IRS doesn’t communicate through unsolicited calls, email, texts or social media. Fraudsters may “prove” their legitimacy by providing you with the last four digits of your social security number or fake IRS badge numbers. For taxpayers out of the loop, IRS imposters can be quite convincing.

Defense: Always question calls/emails from the “IRS” and be up-to-date on the typical fraud schemes. Understand how the IRS would contact you regarding your tax debt and any security concerns. The IRS will rarely call you, and only initiates communication through mail. If the IRS does call/visit a home or business, it will only be for:

  • An overdue tax bill
  • Securing a delinquent tax return or employment tax payment
  • Touring a business for an audit or criminal investigation

Even under those circumstances, you would receive several notices in the mail first. If you suspect an IRS imposter, here’s how to verify the agent’s legitimacy:

If a possible IRS imposter calls or visits you, ask yourself:

  • How are they asking for payment? The IRS asks tax debts to be made to the “United States Treasury” via check. Payments will not be collected immediately over the phone — especially not through debit, credit, prepaid card or gift card.
  • Are they asking for personal information? The IRS will never ask you for PINs, passwords or any information that would lead to accessing your banking or social media accounts.
  • Are they threatening or pressuring you? Imposters commonly resort to scare tactics, usually by threatening arrest, deportation, etc. The IRS can’t revoke or block your social security number, licenses or citizenship, and won’t threaten you with jail time or anything else for immediate payment.
  • Do they say they’re with a private collection agency? Occasionally, the IRS will hire private debt collectors, but they will never ask for payment that isn’t a check. These private debt collectors will also follow the rules of the Fair Debt Collection Practices Act.
  • What type of identification did they provide?  IRS representatives will always provide two credentials: a pocket commission and a HSPD-12 card. To make sure the caller is the real deal, the representative will provide you with an official IRS telephone number that will confirm their identity.
  • Do I doubt this person’s legitimacy? Hang up. Call back through the IRS’ official number for individual taxpayers.
  • Did I receive an email? The IRS will never contact you through email. As such, you should make sure you don’t open any emails or attachments — let alone download anything — claiming to be the IRS.

Learn more about verifying a possible IRS agent here. You can also find a list of current tax identity theft scams here.

Trusting your information is safe online and off

Just like it’s easy to skip a routine physical if you feel fine, it’s easy to skip checking on your personal information’s security. That’s where tax identity thieves strike: when your guard is down. With recent data leaks, you never know who might already have your information.

Defense: Be vigilant. Prevention is the best medicine. Nip any potential security issues in the bud. Here are a few tips to make yourself a harder target for any potential thieves:

  • Practice good cybersecurity. Make sure your firewall and anti-virus software is updated, always use strong passwords to encrypt personal information (use multi-step authentication if you can), don’t trust shady sites or software and always back up your files!
  • Don’t file your return on unsecured networks. Never send tax documents over a website that doesn’t have “https” in the address, or on public Wi-Fi. Offline, always research your tax preparers before giving them your information, and confirm they’re a verified CPA in your state.
  • Know who actually needs your social security number. Don’t give it out over email or over the phone when you didn’t initiate the contact. If you’re unsure who does and doesn’t need your social security number, try to only give the last four digits as an identifier.
  • Never leave your information in the open. Make sure the answers to security questions protecting your online accounts can’t be predicted from your social media, and never leave tax documents in plain sight (and always lock them up when you’re through with them).

What to do if you think someone stole your tax refund

Good news: your tax refund will still be available to you at no cost. The IRS partners with your state and the tax industry to recover stolen refunds. If you believe you’ve fallen victim to tax identity theft or your social security number was compromised, the FTC and IRS have a variety of resources and guidelines to walk you through every step of the way.

  • Immediately respond to any IRS notice or tax return rejection.
  • If you suspect a scammer, gather any records you have of the interaction, including the imposter’s phone number and their “identification.”
  • If your tax return was rejected because of a duplicate filing using your social security number, file an IRS Form 14039 Identity Theft Affidavit.
  • Visit the FTC’s identitytheft.gov to get a personalized recovery plan and further details.
  • Monitor any further bank or card activity, and consider freezing your credit. If your social security number was compromised, the fraudster may have additional personal information.
  • Consider signing up for an identity theft protection service. Our favorite is Identity Guard because it offers the most comprehensive credit monitoring and identity theft alerts of any service we review. Although Identity Guard and the other services we review can’t prevent you from falling victim to identity theft, they can help you stay in the know with your credit and identity health so if something does happen, you’re aware and can take quick action. And if you fell victim to tax identity theft, there’s a good chance your information is on black market websites or being used somewhere else — an identity theft protection service can help you see if that’s the case. Visit our identity theft protection reviews to learn more about Identity Guard and the other services we review.

Visit our tax identity theft blog to stay secure, and keep ahead of the curve with the latest news in identity theft protection.

Disclaimer: This content is not provided or commissioned by the companies referenced in this article. Opinions expressed here are the author’s alone and have not been reviewed, approved or otherwise endorsed by the companies mentioned. NextAdvisor.com may be compensated through advertiser affiliate programs.