Tax-Related Identity Theft a Growing Epidemic, Consumers Urged to Be Vigilant
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Identity thieves gather information through a variety of means including phishing scams, dumpster diving, and retrieving discarded financial records

Updated: February 06, 2017

What if you were the victim of tax identity theft and didn't even know it? This is a growing reality for a number of Americans, as tax-related identity theft has been on the rise in recent years.

Tax identity theft occurs when someone uses your Social Security Number to get a tax refund or a job. Identity thieves gather information through a variety of means including phishing scams, dumpster diving, and retrieving discarded tax returns, bank statements, and other records containing personal and financial information.

According to the U.S. Treasury Inspector General for Tax Administration (TIGTA), more Americans' identities were stolen in tax refund crimes in the first six months of 2013 than in all of 2012.

In 2012, the Internal Revenue Service (IRS) estimated nearly 1.8 million incidents of tax-related identity theft, and refunds totaling $5.2 billion issued to the wrong people. This figure includes approximately 280,000 incidents where taxpayers contacted the IRS alleging that they were victims of identity theft, leaving nearly 1.5 million cases unreported. The IRS says that it has detected cases of tax identity fraud in every state except North Dakota and West Virginia.

Tax identity theft was also once again named to the IRS ‘Dirty Dozen' list of tax scams for the 2017 filing season.

On average, it takes the IRS approximately six months to resolve a tax identity theft issue. Thieves normally file early in the tax-filing season, often before the IRS has received W-2 or 1099 forms, to prevent information matching and avoid receiving duplicate return notices from the IRS.

Experts agree the most effective way to protect against tax related identity theft is through constant vigilance over all personally identifiable information.

Possible safeguards include: 1) Ensure the safety of your wallet or purse by keeping it in a safe place while at home and at work. 2) Lock all important papers and documents in a secure location. 3) Shred all documents with personal information prior to discarding. 4) Wipe and erase the hard drive on all computers and electronics prior to discarding. 5) Use strong passwords. 6) Do not overshare personal information on social networking websites. 7) Learn to recognize and avoid phishing emails, threatening phone calls, and texts from thieves posing as legitimate organizations such as a bank, credit card company, and government organizations, including the IRS.

"We're calling on taxpayers to do everything they can to protect their private information because criminals continue looking for new and more sophisticated ways of beating the system," said IRS Commissioner John Koskinen. "We also encourage tax professionals and others in the private and non-profit sectors with access to large amounts of sensitive information to watch out for identity theft schemes."

If you suspect that you've been the victim of tax related identity theft, contact the IRS immediately . To limit the damage caused by identity theft, experts recommend that you: place a fraud alert on all credit reports and create an identity theft report by filing a complaint with the Federal Trade Commission (FTC). You should also file a police report.

It's also a good idea to regularly monitor your credit report for any suspicious activity. Check your credit report now at AnnualCreditReport.com.

For more information, see the special identity theft section on IRS.gov.

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