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Gone phishing: Identity thieves are at it again

October 19, 2015 / 2 min read

There’s an epidemic hitting taxpayers, and it’s unrelated to more cumbersome tax laws. Identity thieves have been filing fraudulent returns and receiving refunds — all in the name of other taxpayers. It’s been discomforting to learn about the rising number of taxpayers who’ve submitted tax returns only to learn from the IRS that they had, unknowingly, already filed and received a refund. Here’s how the scheme works.

Using someone else’s name and Social Security number, identity thieves file a false tax return, creating fictitious W-2s showing employment and detailing that a refund is due. The online filing process is simple, allowing most thieves to file numerous fraudulent returns in a day.

The refund checks are mailed to the address or to the bank account listed on the return — and of course, neither reflects the actual taxpayer’s information. While this discrepancy prevents a large number of refund requests from being processed, others get through at a cost of billions of dollars annually to the IRS and taxpayers.

This causes undue stress and hardship for the victims. If you’re a tax fraud victim, the IRS freezes your refund, pending an investigation. Agency reductions have caused a backlog of claims that can take months to resolve — a process that leaves victims unable to obtain their refunds.

It’s all possible because the thieves are able to gain access to personal information, which in many cases is offered voluntarily — albeit unwittingly. To reduce the risk of identity theft in tax-related schemes, keep the following in mind:

The IRS is aware of the identify theft epidemic and has instituted measures that are becoming increasingly effective at preventing fraud. However, it’s a cat-and-mouse game, and identity thieves are staying ahead of the chase. In the meantime, awareness and skepticism are your best tools to prevent becoming a victim.

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