Tax ID Theft
It's the biggest and most prevalent tax scam happening right now - and the peak season is just around the corner. We're talking about tax identity theft and refund fraud.
This scam has become a big problem due primarily to its simplicity. Identity thieves steal their victims' sensitive personal information - primarily Social Security numbers and birth dates - and then file fake tax returns requesting refunds in their name. If thieves file bogus returns before victims files their legitimate tax returns, the IRS will usually send a refund check to the thief.
Victims, meanwhile, are left with the task of having to demonstrate to the IRS that the first return filed was fraudulent. Doing so can take weeks or months and countless hours on the phone or at an IRS office. And until the problem is resolved, no legitimate refund check will be issued to the victim.
An Exploding Problem
Tax identity theft and refund fraud first surfaced in 2008, but the problem has exploded in recent years. It is estimated by the IRS that more than 3 million fraudulent tax refunds were sent to tax identity thieves last year alone, up from just 51,000 a few years ago. The total cost to taxpayers is estimated to be more than $5.2 billion.
Tax identity theft is now the largest category of identity theft complaints by far, according to the FTC. It accounted for 43% of all identity theft complaints in 2012, up from 15% in 2010.
One of the biggest challenges when it comes to dealing with tax identity theft is the fact that most people don't find out they are victims until it's too late. Typically, taxpayers get a notice from the IRS after they have filed informing them that a tax return they have already.
Frazier & Deeter has the tools to help you protect yourself again tax identity theft. To find out more, watch our video.