The Safe Way To Keep Your Tax Refund

The holiday season is just getting underway, a time dedicated to finding the perfect gift for loved ones and a steady procession of festive events that ends when we ring in the New Year. Unfortunately, it is also a busy time for the commission for tax fraud related to identity.
I’ve written more extensively about this issue in my bookSwiped: How to Protect Yourself in a World Full of Scammers, Phishers, and Identity Thieves, but there are a few points that bear mention this month. Among the different tax-related identity crimes discussed in Swiped, I checked one of the main reasons for this crime is increasing: information violations. Before we go any further in our consideration of the above, it’s important to drive home the one lesson to be learned here (there is only one): Tax fraud is on the rise. Tax refund fraud losses are estimated to reach $21 billion by 2016, according to the Treasury Inspector General for Tax Administration.
The fact that you have not yet been a victim of identity-related tax fraud may not have much to do with your efforts to stay safe. In fact, it might be nothing more or less than dumb luck. We’re looking at a numbers game in the evolution of this particular identity-related crime. With more than a billion records “out there,” it is possible that the only reason you have not been victims of the bad guys did not get around to you.
The major data breaches at Anthem and Premera exposed 91 million Social Security numbers. In just those two compromises, hackers gained access to all the personally identifiable information one would need to commit tax identity theft for many years to come. While it might be comforting to say these breaches represent the main threat, it would also be inaccurate. Just because your information is not leaked in violation of the above does not mean you are safe.
How to secure your tax refund
The number one way to avoid getting “got” by identity-related tax fraudsters is to file early and beat them to the punch. The sooner you get your tax return to the IRS and your state, the better. Until the government creates better safeguards, rapid provision of information is the best measure.
What If You’ve Already Been Scammed?

If you have become the victim of tax fraud, my book has a checklist of things you can do to safeguard yourself from subsequent problems. Here is one of these you need to do.
1.     Request a fraud
Contact one of the three major credit reporting agencies — Equifax, Experian, or TransUnion — and ask that a fraud alert be placed on your credit records.
2.     Report the Crime
Calling the FTC Identity Theft Hotline at 1-877-438-4338 or File a report with your local police and file a petition with the Federal Trade Commission at 

3.     Consider Enrolling in a credit monitoring program
You might wish to purchase a combination credit and fraud monitoring service, which provides instant alerts whenever anyone attempts to open a credit account in your name. This tracking is an effective way to fraud alert.

4.     Request assistance from IRS
Call the number provided on the IRS notice informing you of the fraud. To clear your tax record, complete IRS Form 14039, Identity Theft Affidavit. You can use a fillable form at, print it, then mail or fax it.

5.     Close account immediately fraud
Close any credit or financial accounts have been tampered with by a thief or opened without your permission.

6.     Pay your taxes
Be sure to continue to pay taxes and file your tax return on time, even if you must do so by mailing in paper forms.

7.     Vigilance
You have to assume that if someone has enough of your personal information to file a tax return, they have more than enough information to commit other forms of identity theft. Read every explanation of benefits statement and be sensitive to any communication you may receive from a debt collector.

8.     Stay Diligent

If you contact the IRS about ID theft taxpayers and not get a resolution, contact the Identity Protection Specialized Unit at 1-800-908-4490 for your case.

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