How to Safeguard your Tax Returns from Identity Theft

With tax returns going online, authorities have warned e-filers of a potential threat in relation to their tax returns. These warnings were based on the increasing number of fraudulent claims made through the online tax return system in order to rob innocent taxpayers from their tax refunds. Experts point out that such fraud can also be classified as instances of ‘identity theft’ as the fraudster will only require the person’s name, Social Security number and the birth date in order to carry out the fraud.

How fraudsters receive tax refunds on-behalf of someone else?

Although you might think that tax returns go through serious scrutiny following its submission through the online system, the reality is that it takes time for the authorities to crosscheck the information submitted through the online system with actual documentation. However, the IRS takes measures to evaluate online tax returns within 21 days and award tax refunds either as a direct deposit to your bank, to the debit card or in the form of a treasury check.

The crosschecking of the tax return information with the documents forwarded by your employer takes around six months. Thus, by the time the IRS detects the fraud, they have already made payments to a fraudulent account. Although this does not necessarily deprive you of your right to receive the due refund, it will delay the process considerably and will put your tax file under scrutiny.

What precautionary measures can minimize the risk of identity theft?

You should always take precautions to protect the vital information that would allow the online system to recognize your identity. In this regard, experts have suggested filing your taxes as early as possible. The success of all identity theft fraudsters depends on their ability to file the same information before the true owner of the same identity submits his or her tax return. Thus, if you can file the tax return as early as possible, then your chances of being subjected to tax refund fraud would be slim. You should always file your tax returns via a secure network using an Ethernet cable rather than using a public network or via an unsecured Wi-Fi connection.

Experts believe that identity theft may easily be done when you use open networks. Experts also recommend removing tax files from your computer as soon as the files have been submitted. You may copy the files to a flash drive, or  to another portable device and store the same in a secure location for later use. Updating the antivirus software and avoiding clicking on any malicious emails are two other methods of protecting your identity. Furthermore, the IRS advises all taxpayers to verify the authenticity of any calls, emails and messages received from the IRS by calling their hot line. At the same time, providing your personal information via email or in response to a short message should be done with caution only after verifying the party requesting the said information.

What are the methods of detecting a possible identity theft and tax fraud?

In any event, if the unfortunate incident of identity theft takes place and a fraudster submits a tax return using your identity, there are several ways that you may be able to identify the same. One is when the IRS website does not allow you to submit the tax return through its online system. The second is when the IRS lets you know that there have been multiple tax return submissions. Third would be when the expected tax refund does not arrive within the expected period of time. In all such instances, fraud can be one of the explanations, and it may be wise for you to double-check your submission and inform the IRS regarding your worry.