E-mail updates
Follow on Twitter
Subscribe to RSSThe vast majority of Americans filed their tax returns electronically last year, taking advantage of e-filing systems that offer convenience for taxpayers but also have opened up a major new avenue for tax fraud.
About 81 percent of taxpayers filed their returns electronically in 2012, the independent IRS Oversight Board said in a report released Friday. That represents about 119 million taxpayers and is an increase of four percentage points from 2011.
The steady increase in the number of people filing electronically makes sense: For most people it’s easier and more convenient than filling out all those forms the old-fashioned way, with paper and pen.
Electronic filing of tax returns also has gained popularity in recent years with thieves, who use stolen Social Security numbers and other information to file fake tax returns using popular tax preparation software, and then collect hefty refunds.
The IRS has identified about 460,000 people who have been victimized by identity theft tax fraud since 2008, according to the IRS Oversight Board report.
The IRS has said that it is taking aggressive steps to stop such thieves from fraudulently filing electronic tax returns on other people’s behalf. Those steps include adding more fraud screens and increasing the resources devoted to helping identify theft victims.
About 3,000 IRS employees are now working on identity theft issues, Beth Tucker, the IRS’s deputy commissioner for operations support said in Congressional testimony late last year.
Still, security experts expect such fraud will continue to be a challenge this year.
“The thieves aren’t stopping,” said Linda Foley, co-founder of ID Theft Info Source and an expert on identity theft.
The IRS Oversight Board also said preventing identity theft tax fraud – and helping victims of the crime – should continue to be a big priority for the IRS.
“(T)he IRS faces a major challenge in preventing thieves from using the e-file system to commit refund fraud on a large scale, including schemes based on ID theft. The IRS also faces the challenge of providing responsive assistance to taxpayers who have been victims of tax-related ID theft,” the report said.
Many taxpayers don’t realize they are a victim of identity theft tax fraud until they try to file their own taxes and find out someone else has done so before them. In the past, people who were victims of such fraud have described a frustrating, often monthslong process of trying to resolve the fraud problems and get their real returns filed.
Foley cautioned that fears about identity theft tax fraud definitely shouldn’t stop people from filing electronically. Online filing is still safer than filing by mail, she said, especially if you store the information you file electronically in a safe way.
“People should file electronically and then take steps to make sure that the electronic footprint that they made is safeguarded,” said Jay Foley, who runs ID Theft Info Source with his wife, Linda.
Here are some other steps you can take to reduce your chances of being a victim of such fraud.
Use a trustworthy tax accountant: One of the easiest ways for thieves to get access to your personal information is if you give it to them. The Foleys cautioned that you should check carefully who is filing your return on your behalf, because that person could be tempted to sell your information or use it themselves.
File early: One key way to prevent fraud is to get your return filed before a thief has the chance to. Jay Foley said one common tactic is to take information that was stolen last year and use it to file a fake return as soon as possible, likely in early February.
Protect your data: If you file your return electronically, make sure that the computer you used is secure. Linda Foley recommends saving the data on a thumb drive that you remove from the computer once you are done filing and store in a secure space.
The IRS also recommends that people not carry their Social Security card with them or share their Social Security number unless absolutely necessary. They also recommend installing security software on your computer and running regular credit checks.
Jay Foley also said you can protect your data more easily by filing your taxes yourself, rather than sharing it with a tax preparation service.
“Unless you have a very serious reason for going out and hiring somebody to do your taxes, do them yourself,” Jay Foley said.
Related:
IRS faces surge in identity theft tax fraud
For identity theft victims, paying taxes is a nightmare
Leave a Comment:
It's also high time they cut out the middle man. I should be able to login to an IRS site and file my taxes (as I can for my CT state taxes). I shouldn't be forced into the hands of some third party.
Never file electronically... Let the IRS at least take the time to capture my tax return... I don't want to make their job easy while they don't make my filing easy
That's right RamFla. Let some minimum wage flunkie attempt to accurately read your tax return and transcribe it into the system.
E-filing is safer and faster.
@SEBlake: My neighbor works for the IRS. Very few tax returns are manually transcribed. Only those that can't be read by machine get that treatment. As long as your numbers are legible and the machine-read totals add up with the individual entries, it won't be manually entered.
Just curious: When the article says "thieves" are they talking about our politicians in D.C. or the Federal Reserve? Just wanting to get some clarification......
Pro,
Identity thieves. Some websites are setup to look official but are run by phisers. Other sites just are not secure. As with all things on the Internet, do your research before providing any sensitive information to them.
Identify theft is a very strong reason that out tax code needs a review and simplified. Make paying taxes reasonable and fair. Stop offering loophole deductions and massive refunds. If a couple with two children filing jointly and running their business out of their home should have a very clear picture of their tax liability. Adding deductions and write-offs etc is making the process more expensive when you consider accountants and a margin of error because deductions that are taken could be taken in error. Penalaties for late filing, penalties for honest mistakes on a filing.
If the Tax code is made reasonable and the liability for taxes are flat then the possibilit of fraud will deminish.
How many of those thieves are IRS employees?
Make the penalties for fraud something to fear. Real jail time and large fines. No exceptions.
As long as you don't get charged for anything over a billion dollars.
You file your taxes online and the IRS sees your bank account numbers. They may then see everything you've ever gotten in extra income including maybe a $100 check as a Christmas gift from a relative. Filing online makes it easy for them to getcha! I don't want to have to worry about every time I receive a $25 birthday or a $100 Christmas gift in the form of money.
IRS sees your account number if you send them a check, even if you file with paper.
If you file electronically, you may elect to get a refund as a paper check, then you don't give your account number.
Also, such small gifts are not taxable anyway.
Tax preparer here. If the IRS wants your bank account number, trust me, they can get it. And no gifts are taxable to the recipient.
I take exception to part of this article on the following:
1.) Utility companies will not open an acount unless you provide your social security number or pay a fee to them. They will not check with your previous utility to check your credit payment history.
2.) It is stated not to carry your social security number with you. If you are retired and have a medicare card it lists your social security number. If you have an medical emergency or a medical appointment you must show your card.
So how does this protect you and the system from increased chances of fraud?
The idiots can't put a program in place to limit or prevent fraud, but they can obfuscate and obstruct the attempts of victims to get things straightened out.
The unmotivated Federal bureaucracy at work. Let's let them take over our health care. I'm sure we'll learn to love it in due course.
The voters who are government-dependent like to see everyone at the lowest common denominator, which is what you get from a government 'helping' you.
Electronic & early.
At least there's one upside to owing the government money instead of getting a return-no one will be stealing my identity to file MY taxes!
Since I have to pay I fill out the forms online, print them and mail them with my payment. I've used the same service for years and it costs me about $20 compared to $200 to have someone else do the same work. Last time we took our taxes in our no-nonsense tax prep lady had retired and we ended up with someone who spent more time on the phone with her kid than she did looking at our taxes. Not only was I irritated over her wasting a bunch of my time but I worried she was so distracted she didn't fill out everything properly. The next year all I needed to do it myself was a printer which was easily bought out of the money I saved by not going into the tax place. It takes me about two hours to get through everything (by the time I go through CC statements so I know how much state sales tax to pay on my mail order shopping). That means an earning for me of about $100 an hour in the money I saved. Otherwise I'd have to make an appointment, spend 45 minutes driving to the tax place, an hour there and a 45 minute trip back home.