Identity fraud unfortunately continues to be a booming business: In 2014, 17.6 million Americans fell victim, and cybercriminals made off with $15.4 billion. And despite the IRS’ efforts to stamp it out, tax refund theft remains a lucrative activity for thieves.
In one scam, hackers filed bogus returns with information harvested from the IRS’ own files or by using Social Security numbers. Then, they waited for the direct-deposit refunds to flow in to the hackers’ accounts. Victims usually didn’t know anything was wrong until the IRS refused to accept their legitimate tax returns.
Here are some of the defenses that the IRS, state tax agencies and the e-filing industry are using to combat scammers:
Quicker responses to warnings
Thanks to technological enhancements, the IRS now receives warnings if a large number of returns come from a single computer address within a short period of time.
Delaying refunds
This allows the IRS time to recognize when more than one return has been filed for the same Social Security number. Previously, the IRS issued e-file refunds seven to 10 days after it received a return. The new target is 21 days.
Earlier filings of W-2 forms
Businesses used to issue wage and payment statements to workers by February 1, but weren’t required to file them with the IRS until June. Now, both will be due by January 31.
Sharing information
Intuit, which makes TurboTax, and H&R Block have agreed to share more information more promptly with the IRS about filings they consider suspicious.
Safety begins at home. The IRS issued a guide for taxpayers on identifying — and more importantly, avoiding — tax refund fraud. Some of the tips include:
- Always use security software with firewall and anti-virus protections, as well as strong passwords.
- Learn to recognize phishing emails, calls and texts from thieves posing as legitimate organizations, such as your bank, credit card company and even the IRS. The IRS will never try to contact you via phone or email.
- Don’t click on links or download attachments from emails if you don’t recognize the sender.
Protect your personal data
Don’t routinely carry your Social Security card, and make sure your tax records are secure.
If you think someone used your information to file a return, contact the IRS immediately. Specialists will help you file your tax return, receive any refund you’re due, and protect your account from identity thieves in the future.
As always, if you notice suspicious activity with any of your First Internet Bank accounts, contact us immediately at 1-888-873-3424.
Guest author, NerdWallet
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