We are all well aware of big corporations being hacked and our information being compromised. Many, if not all of us have been victims of this and have likely been offered a year or so of free credit monitoring. It's important to monitor your credit; however, by the time you see something on your credit history, a new credit card has already been opened and likely used. And worse, credit monitoring will not notify you if someone other than you has filed your tax return!
As of March 5, 2016 the IRS had identified over 42,000 tax returns with $227 million claimed in fraudulent refunds. What's more, the IRS prevented the issuance of over $180 million in fraudulent refunds. If you've been one of the unlucky victims of this fraud, you know how it works. The criminal who has obtained your information is able to file your tax return early in the fling season and claim a refund. The IRS doesn't match earnings records until several months after it issues refund checks. When you file your return, the IRS lets you know that more than one tax return has been filed and the fun begins of sorting it out.
Unfortunately, there is not a lot you can do to prevent this from happening to you. The IRS continues to expand filters to detect identity theft refund fraud, however the criminals also continue to expand their abilities of committing fraud!
The best line of defense is to protect your personal information as best you can.
- Don't carry your social security card.
- Don't provide your social security number to anyone unless there is a legitimate need for it.
- Shred your sensitive trash with a cross-cut or micro-cut shredder.
- Don't leave outgoing mail with personal information in your mailbox for pickup.
- Never provide personal information to anyone in response to an unsolicited request.
If you are a victim of identity theft, or at risk because your information has been breached, go to: https://www.irs.gov/uac/Taxpayer-Guide-to-Identity-Theft
In addition to credit monitoring, you are able to go a step further to protect yourself if your information has been stolen. You can request a Credit Freeze on each of the three Credit Reporting Bureaus (Equifax, Experian & Trans Union). This is a total lockdown of new account activity in your name. Laws vary by state. Minnesota charges $5 for each of the three Bureaus. To check your state, go to: www.consumersunion.org. You should also know you will need to unfreeze at the Bureaus to open an account and it can be cumbersome to start and stop.
Take precautions now to save yourself time and inconvenience later!