Preventing Tax Identity Theft

By HSFCU Marketing in Security, Your Life, Your Money
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March 19, 2020

Having a tax refund on the way can be a source of relief for many people – however, becoming a victim of identity theft can result in a wait of almost a year to receive your refund. According to the Federal Trade Commission’s (FTC) Consumer Sentinel Network, more than 27,000 incidents of tax-related identity theft fraud were reported in the U.S. in 2019. And surprisingly, younger people are more often victims of this type of identity theft compared to older taxpayers.

Tax Identity Theft
According to the FTC, tax identity theft occurs when a fraudulent person uses your Social Security Number (SSN) to file a phony tax return in order to collect a refund. Many victims are not even aware that they’ve been compromised until after their real tax return is rejected by the IRS as a duplicate filing. Tax returns can also be delayed if a person steals your SSN for employment – an unknowing employer could report an impostor’s income under your SSN, which will result in your return being flagged for unreported wages.

Scammers may also pose as an IRS agent, and claim that taxes and penalties are owed, including possible jail time. Fearful victims will then follow instructions and provide money, gift cards or prepaid debit cards, which are quickly spent by the fraudster before the calls are investigated.

Recovery and Resolution
Fortunately, there are resources available to help stop further fraud if you are a victim of tax identity theft:

  • IdentityTheft.gov – If you find yourself the victim of tax related identity theft or any type of identity theft, you can file a report with the FTC and IRS on this site. Based on the information provided, they can help create a personal recovery plan and give you guidance as you take the steps to recover your identity.
  • The IRS provides a “Taxpayer Guide to Identity Theft,” with things to look out for, tips on keeping your information secure, and instructions on what to do and who to contact if you become a victim. They also provide information on their Identity Theft Victim Assistance and how it works.
  • The FTC also has a section on their website dedicated to Tax-Related Identity Theft, ways to prevent it and what to do if it happens to you.

And always remember the following tips to avoid becoming a victim:

  • Protect your SSN year-round. Don’t provide it to anyone unless there’s a good reason and you trust who you’re giving it to.
  • File your tax return as early as possible.
  • If you e-file your tax return, make sure you use a secure internet connection. If you mail your tax return, send it directly from the post office.
  • Research your tax preparers thoroughly before giving them your personal information.
  • Check your credit scores regularly to monitor your accounts and make sure no one has opened fraudulent accounts in your name.

About HSFCU Marketing

Hawaii State FCU firmly believes that financial education empowers people to make smarter decisions throughout their lives, resulting in a better financial future. We do this by providing useful financial tools such as educational blogs, online courses and free webinars on a variety of topics including planning for retirement, debt management and buying a home. For more information on these and other resources, including free financial calculators and budget-friendly recipes, visit www.HawaiiStateFCU.com and click on “Financial Health.”

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