Tax season tips: Don't let thieves steal your refund
As taxpayers continue to submit their returns this filing season, one thing they may not be accounting for is the fact that criminals could be attempting to use their information to steal their refund.
Bryan Pukoff, a tax planning professional at financial services firm Rehmann, told FOX Business that he has seen incidences of tax-related identity theft rise throughout recent years. This type of theft occurs when someone uses a stolen Social Security number or taxpayer identification number to file a fraudulent return claiming a refund – sending the cash to a false address.
Pukoff’s best advice is to file early, so the IRS accepts your return and not the fraudulent one.
The first clue indicating potential misconduct for tax professionals like Pukoff is a notification from the IRS that the return has been rejected, which can mean documents have already been filed on behalf of the individual in question.
The IRS has cracked down on tax-related identity theft throughout recent years. In 2018, the Federal Trade Commission (FTC) said reports of tax-related identity theft were down 38 percent when compared with the year prior.
More than 70 percent of Americans typically receive money back from the IRS after filing. This year, the average refund so far is about $3,008 – essentially in line with last year’s average.
Having to deal with the IRS over a stolen refund can not only create a logistical nightmare, but it can also seriously delay when you receive your refund – a potential problem for the many American households reliant on that cash. According to a recent survey, 27 percent of people plan to use their refunds to pay off debt.
Tax identity theft could lead to a lifetime of problems for the victim. Criminals typically need a name and a Social Security number to file a fake return – and once that Social Security number has been compromised it can cause problems forever.
When it comes to filing your taxes, however, the IRS has a system to help prevent you from being victimized again. The agency will give taxpayers who fill out the appropriate forms a unique PIN that changes each year, Pukoff noted.
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If you fall victim to tax-ID theft, here are some steps you can take right away:
- Report the fraud and file an affidavit.
- Contact state and local tax departments.
- Contact at least one of the three credit bureaus and implement a fraud alert on your reports.
- Reach out to banks and financial institutions that might be affected.
- Monitor credit card statements, missing mail.