Stolen identity tax fraud is a major tax scam you need to be aware of.
How It Works
1. Someone steals your identity
2. Files a bogus tax return in your name before you
3. Collects a refund from the IRS
All the criminal needs are a smartphone/computer, social security number and date of birth. He or she makes up the rest of the information like employer, salary and how much money was withheld. The refund can be sent wherever the criminal wants it to go. Unfortunately, if a bogus return is received before a legitimate one, the check will go out to the crooks.
How Are Social Security Numbers Obtained? –
The best way to get these numbers is to have somebody on the inside or someone who has access to this information. A lot of these individuals are insiders in big institutions like hospitals, schools, clinics, etc. The thief often offers them a cut of the refund for the needed data.
On The Rise –
Millions of American taxpayers are affected every year. Tax payers pay billions of dollars for this fraud. It started with hundreds of people filing hundreds of fake tax returns to thousands of people filing millions of fake returns.
What To Do? –
When the IRS gets two different returns with the same Social Security Number, the second return filed will be rejected if it were e-filed. If you paper filed, you would receive a written notice that states that a return has already been filed.
Fill out IRS Form 14039 to alert the IRS that someone has not only stolen your identity but has also filed a tax return with your SSN. Include information about the tax year affected and the last return you filed prior to the identity theft.
The criminal may also use your identity for other crimes. Place a freeze on your credit report with all three credit bureaus. File an identity theft report with your local police department and with the FTC.