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Tax Identity Theft – Part 1 – The Basics
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In recognition of tax season, CSIAC has created this forum topic to help users detect scams, protect sensitive information, and learn where to report suspicious activity. By posting a series of questions in this forum, CSIAC hopes to promote discussion allowing the CSIAC community to help each other. You are encouraged to provide your own answers and resources.
Part 1 Questions:
- What is tax identity theft?
- How common is tax identity theft? Are you really at risk?
View Tax Identity Theft – Part 2 – Warning signs, If you’re a victim, Minimizing Risk here: https://www.csiac.org/groups/cybersecurity/forum/topic/tax-identity-theft-part-2-warning-signs-if-youre-a-victim-minimizing-risk/#post-16576
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A1: Tax Identity Theft happens when someone uses your Personally Identifiable Information PII such as your Social Security Number (SSN) to file a tax return in your name to claim a fraudulent refund.
Other examples of tax-related identity theft include a criminal claiming your children as their dependents, claiming a tax refund for a deceased taxpayer, or someone earning wages using your SSN. Thieves may also use a stolen Employer Identification Number (EIN) from a business client to create false Forms W-2 to support refund fraud schemes.
You may be unaware that this has happened until you efile your return and discover that a return already has been filed using your SSN. Or, the IRS may send you a letter saying that they have identified a suspicious return using your SSN.
A2: Tax Identity Theft is very common and it is a very real threat. As Tax Day approaches, cyber-criminals will increase phishing scams activity by email and phone calls using social engineering to fool victims into giving out their PII. This can be very lucrative for a criminal. The IRS estimates that would-be thieves used false identities to try to steal $14.5 billion in refunds in the 2015 tax year.
In addition, Tax Identity Theft is on the rise, especially targeting W-2s and employers. In 2017, approximately 900 organizations reported to the IRS that they received a W-2 phishing email, up from about 100 organizations in 2016. Last year, more than 200 employers were victimized, which translated into hundreds of thousands of employees who had their identities compromised.
The Identity Theft Resource Center (ITRC) has reported that more 178.9 million records were exposed in data breaches through December of 2017. The even if the information exposed in the data breach does not include your SSN or other more sensitive information, it may give thieves enough information to target you and get you to accidentally release what they want.
The next part of this topic will discuss tax identity theft warning signs, what steps you should take if you’re a victim, and how to minimize your risk.
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It appears that the Equifax Hack may have implications that could potentially increase the risk of fraudulent tax filings. Check out the following article for more info:
http://fortune.com/2018/02/11/equifax-hack-exposed-extra-data/ -
A2: According to Experian: Very common. In 2014, the IRS identified 766,000 victims. The IRS has taken measures to identify fake returns with only about 100,000 victims in the first five months of 2017—a 47% drop from 2015. See: https://www.experian.com/blogs/ask-experian/how-to-stop-identity-thieves-from-stealing-your-tax-refund/
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Tax identity theft is very common. Just think about how many times you have given your SSN when filling out a loan application or a job application or providing it on a website. What about when you actually have written it down for whatever reason and handed it to some worker trusting that she/he would shred the paper containing your SSN. In addition, all of these companies where your SSN has made its way to contain people and some are just terrible people. Realize that there are many insiders who don’t need to be an actual “Cyber Criminal” to steal that data because they already have that data within their grasp. People’s carelessness, mischief, combined with actual cyber-attacks that steal people’s private information is hard to control.
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Tax identity theft means use of other’s personal details to claim tax benefits or asking for tax return. This fraud is very harmful because the taxpayer may have no way of knowing that fraud has been committed. The fraud will only be detected when a taxpayer receives a notice from the Internal Revenue Service (IRS) or state tax authorities of a problem with her return.
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What is tax identity theft? It happens when someone uses your Social Security number (SSN) to file a phony tax return and collect your refund. You may not find out it has happened until you try to file your real tax return and the IRS rejects it as a duplicate filing. IRS imposters are scammers who pretend they’re calling from the IRS. They claim you owe taxes and demand that you pay right now, usually with a gift card or prepaid debit card. They threaten you’ll be arrested or face other bad consequences if you don’t pay. But it’s all a lie. If you send the money, it’s gone.
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