Ten key steps for victims of tax fraud: Internet Scambusters #1,058
Millions of Americans are at risk of tax fraud right now - because they waited until the last minute to file their return.
Some of them will be shocked to discover that someone else has already claimed their refund.
In this week's issue, we explain what to do if you fall victim to the fraudsters to give yourself the best chance of getting your money back and protecting your finances.
Let's get started…
Tax Fraud Danger For Last-Minute Filers
Nearly one-third of Americans haven't filed their taxes yet - putting them at a higher risk of losing their refund to tax fraudsters who got to the IRS first.
The tax authorities always urge us to submit returns as quickly as possible, but since many of us find the process stressful or daunting, we tend to leave it until the last minute. In fact, an estimated 20 million taxpayers wait until the final couple of days before sending in their forms.
Sadly, this will mean that a proportion of them will discover that an identity thief, armed with their Social Security number, beat them to it. It happens to several million Americans every year.
If you're one of the late crowd, you likely won't know until your return is rejected and the IRS contacts you to say they previously received one in your name. The first sign of rejection is likely to be if you e-file your return. If that happens, print out your return and send the paper version to them.
10 Key Steps
Tax fraud is part of the wider crime of identity theft, so the steps you take should include all the following measures to take to protect your financial security now and for the future.
- When you're notified, follow any instructions from the IRA. If you suspect you're a victim but don't know for sure yet, or if you have any questions, you can call the IRS at 1-800-908-4490. Be warned though, at this time of year the line is very busy!
- Tell law enforcement. They probably won't be able to do much but it puts the offense on the record.
- Also report the fraud to the Federal Trade Commission's (FTC's) identitytheft.gov site.
- Complete and return IRS Form 14039, known as an Identity Theft Affidavit.
- Also, ask the IRS for a copy of the fraudulent return, which you can do by completing and returning Form 4506-F.
- Tell the big three credit reporting agencies (Equifax, Experian, and TransUnion) and ask them to freeze your credit. This is because a tax fraudster obviously has enough information to borrow money in your name.
- Ask any one of the agencies to implement a fraud alert, which will mean you get notified of any changes to your credit arrangements.
- Monitor all your financial accounts for unrecognized activities and spending.
- Check with your state's taxation agency to see if you need to take any further action with them. You'll find your state's contact details in this clickable map.
- Whatever else, don't stop paying your taxes just because you know the IRS owes you money.
The hopeful news is that even if you are a tax fraud victim, you should eventually get your refund, provided you followed the IRS instructions. However, this can take more than a year right now, although the organization says it's trying to get the timescale down to four months.
After their investigation, the fraudulent return will be removed from your tax records and your account will be marked with an identity theft indicator for future protection.
You may also be given an "Identity Protection PIN," a six-digit code you have to provide, which is changed every year.
"We know identity theft can be frustrating and confusing for victims," the agency says. "When it comes to tax-related identity theft, the Internal Revenue Service wants to resolve your case as quickly as possible."
Tax Preparer Fraud
If you didn't do your tax return yourself and know or suspect that your tax preparer might have committed a fraud, the IRS also wants to know.
Types of preparer fraud happen if they use your personal information to file or alter a return without your knowledge. Crooked preparers have also been known to file a different return to the one they copied to you and then take all or part of the refund.
If any of these apply to you, download and complete Form 14157-A.
Occasionally, a scam preparer may try to get you a bigger refund than you're entitled to, sometimes in return for a percentage of the gain. This is illegal. If the fraud is subsequently discovered, you could be regarded as an accomplice.
It's hard to imagine that anyone enjoys filing their taxes but the long-winded, complex process that follows if you fall victim to tax fraud underlines the value of completing and sending in your form as early as possible. Next time.
This Week's Scam Alerts
TV hack: Has your smart TV been hacked by scammers? It may have been if you suddenly get a pop-up on the screen after you try to access one of your streaming channels, claiming there's a problem with your subscription. You'll be given a phone number or website address where you're asked to pay a fee by credit card, which opens the door to identity theft. Sometimes subscribers do really have channel access problems that require using a PC to sign on and input a code. If so, make sure you're on the right site or contact the provider directly. Keep your credit card in your wallet.
AT&T data breach: Phone and broadcast service provider AT&T has disclosed that personal details, such as names and email addresses, of nine million customers were exposed in the hacking of a third party marketing service company. The firm says it has notified those affected. Credit card details, Social Security numbers, and passwords were not, repeat, not exposed.
Time to conclude for today -- have a great week!