Today most of our daily interactions happen online. Whether we want to buy something online with our credit cards, or file tax returns at the closing time of the financial year, the internet is the system we log in to do it all. But one of the rising concerns about the post-digital development of technology is the security of our data. All of our personal information is stored as electronic data and needs to be safeguarded at all cost. This is one of the reasons why bank operators online and reputed third-party services use heavy and strong encryptions to keep all data safe.
How does Identity Theft occur?
Did you know that theft identity also happens offline? While it is easy to believe that hackers are quite adept at breaking into our data e-vaults to steal vital information, reality spells quite a different story. Consider tax- related identity theft. Most of these scam operations become more notorious during the tax filing season. If you are late in paying your taxes and filing your returns, your risk of being scammed increases significantly. FTC in the US claims that most of these scams operators try to contact regular, innocent taxpayers and pretend to act on behalf of IRS to get their personal identity information.
They will either contact you via emails or phone calls and ask for your name, address, credit card information and social security number. A lot of people usually end up giving away vital data that can be used against them. So when you file your tax return and demand a refund, you might get a notice from IRS that a refund check was already issued under your name.
Nowadays tax filings can happen online without using paper forms. As a result, it is very easy for scammers to make up fictitious wages and expenditures and use your identity details to claim a fraudulent refund from IRS. While the IRS does keep an account of every taxpayer’s salary, profession, and other taxable income, it does not match the records with the delivered information for some months after the refund has been issued.
What can you do to avoid tax refund identity theft?
Always file your tax returns early. Scammers usually try to demand returns as quickly as possible so that they can get the refund way before the victim can claim it. Here’s a nice guide on how to report identity theft after it happens.
IRS never maintains contact with taxpayers through electronic platforms like emails, phone calls, social media or text messages. If IRS wants to contact you, they will send you written messages via mail. Never trust any message that comes from other sources.
Check with IRS records to make sure that nothing appears suspicious. If the records show that you received taxable income from other sources which you never heard of, you will know that you are a victim of tax fraud.
What can you do if you are a victim of Tax Fraud and Identity Theft?
If IRS contacts you via mail and states that more than one tax return was filed under your name, start taking necessary steps immediately to defend yourself:
2. Immediately contact one of the three major credit bureaus (The TransUnion, Equifax, and Experian) to report the tax fraud. This will ensure that the status of ‘fraud alert’ is placed on your credit record.
3. Check what credit and other financial accounts have been opened without your permission or misused by the thieves and immediately close them.
Once the IRS is contacted, they will send people to your address and ask for documents so that you can prove your identity. This process will take time and your refund will be delayed for six months. However, make sure that you keep on paying your taxes and filing returns using paper instead of electronic forms.