Imagine this nightmare scenario:
You have finished your taxes and feel a sense of relief as you hit the button to submit your return to the Internal Revenue Service electronically. The government, however, blocks the return.
The problem? Someone else has already filed a fake tax return with your name and Social Security number!
Unbeknownst to a growing number of taxpayers, crooks are filing fake federal and state income tax returns to obtain refunds.
Thieves submit false returns, obtain refund checks and, by the time the real taxpayers file, the crooks have already cashed the checks. The victims then have to deal with putting their financial lives back together after getting their identities stolen in this way.
A report from the Government Accountability Office estimates that tax identity theft cost the IRS $5.8 billion in 2013. There are no more current statistics, but thieves stole records of up to 330,000 taxpayers in 2015.
The federal and state governments have been attempting to fight this cyber crime. For instance, some states alert taxpayers when a return is filed using their Social Security number. Some states also delay refunds until March 1 or later. In addition, many states require driver’s license information from individuals who file their own tax returns.
If you’ve been a victim of tax fraud, here are some things to do:
If your Social Security number has been compromised and you know or suspect that you are a victim of tax-related identity theft, the IRS recommends that you take these additional steps:
You should also know that the IRS does not initiate any contact with taxpayers by email, text message, telephone or social media to request personal financial information or payment.