BBB: Tips to prevent becoming a victim of income tax fraud
For several years, criminals have been using stolen personal information, filing tax returns in other people's names and collecting their refund checks.
"Taxpayers may not know they are the victim of tax fraud until they file their return," according to Better Business Bureau spokesman Howard Schwartz. "The Internal Revenue Service (IRS) subsequently tells them the tax return has already been processed and the check sent out."
Criminals gather personal information to commit the crime from the black market, and data breaches.
Income tax return theft has become a cottage industry, with dozens of fake returns sent out in a week, and dozens of refund checks arriving at the same address. The IRS and state tax collectors have been reviewing and strengthening their systems to flag that kind of suspicious activity. For example, this filing season, the IRS announced additional "trusted customer" features that would help reduce this crime even more.
According to the IRS, tax preparers are increasingly targets of cybercriminals seeking access to client data. Criminals use the stolen information to file fraudulent tax returns. The IRS is urging tax preparers to implement stringent client data protection.
Connecticut Better Business Bureau offers tips to reduce your risk of becoming a victim of income tax fraud:
- File as early as possible — It is a race against time and criminals. Filing can be delayed while taxpayers wait for tax-related documents. The sooner you can file, the better.
- File your return online — eFile is fast, and your refund check usually arrives in a matter of weeks.
- Opt for direct deposit — This is another way to prevent the interception or theft of your income tax information. Between eFile and direct deposit - you don't leave a paper trail at home or in the hands of other people.
- Treat your personal information like cash — The IRS recommends against routinely carrying your Social Security card or documents with your SSN. Avoid oversharing personal information on social media. Information about past addresses, a new car, a new home and your children help identity thieves pose as you.
- Keep your computer clean — Install, update and scan your computer before getting started. If you've got malware on your computer, it can capture all of the information you enter when working on your tax return.
- Select your preparer with care — Word of mouth references are handy, but check out a preparer first with Better Business Bureau or choose from one of our accredited businesses.
If you prepare your own tax return, BBB recommends putting it in a US Postal Service box instead of a roadside box, where the paperwork could be intercepted.
For additional consumer and business tips visit bbb.org/.