With digital crimes such as identity theft becoming more and more common, government agencies like the IRS are frantically trying to protect themselves and U.S. citizens. But it isn’t easy. Organized crime groups have begun to be more cooperative with one another, turning once small attacks into “epic wave[s] of fraud”, according to Alabama revenue commissioner Julie Magee.
Tax identity theft (which the IRS is battling) occurs when a person’s social security number (SSN) is compromised by thieves. When thieves steal an SSN, there are two common outcomes. First, they can use the number and attempt to file for a refund before the taxpayer. If successful, this means that the taxpayer will not receive a refund when he or she files since the system has already paid out the money owed. Second, a thief could apply for employment with the stolen SSN. If they obtain the job, it usually causes the taxpayers 1040 form to be incomplete. This happens because income is reported to the IRS by the employer, but the taxpayer does not record it since they aren’t holding the job.
So how do you protect yourself from ending up in these undesirable situations? The IRS lists a few simple tips:
1. If an email is unexpected, it is likely a scam. The IRS never initiates contact over email and will not communicate with you over social media.
2. Be wary of people claiming to be IRS agents over the phone. If you are threatened, or your financial information is requested in order to send you a refund, it is a scam.
3. Be careful to protect your SSN, both digitally and physically. Don’t carry the card around, and be careful about giving out your number online.
However, no matter how careful you are, you can still be ensnared by tax identity theft. The IRS estimates that they lost nearly $5.8 billion in stolen-refunds in 2013. During the 2014 tax year, they have stopped approximately three million suspicious filings. If you do fall victim to theft, or if the IRS notifies you of suspicious activity, contact them immediately. Fill out the “Identity Theft Affidavit” (form 14039, available on the IRS website) and make sure to keep records of your calls and letters throughout the process. A specialist will help you to get your taxes filed, obtain your refund and re-secure your account.
As the IRS prepares for the 2016 filing season they are putting changes in place. Taxpayers can expect heightened security on tax sites. The IRS is also issuing “Identity Protection Pins” for taxpayers who have been victims or who may have had their information stolen. These changes are a start, but the tax process is certain to need even more changes as the war on digital crime continues into the future.