It’s tax season, and as you gather your W-2 forms and make sure you’re applying for the appropriate credits, it’s become equally important to protect yourself from the emerging threat of tax identity theft.
You might have heard that last month, the maker of TurboTax, the do-it-yourself tax software, stopped processing state tax returns for about 24 hours because of an increase in fraudulent filings. Since then, the Justice Department and other agencies have contacted the software maker to investigate the fraud attempts.
As convenient as it is to have access to personal information online—to do things like file your tax return or apply for Social Security benefits—it’s important to also realize that this creates the possibility for criminals to gain unwanted access to that same information.
If proper precautions aren’t taken to protect personally identifiable information, the retributions could be quite costly. If thieves obtain your information, they may be able to receive IRS tax refunds and Social Security payments in your name.
In the past year, our special agents have coordinated with other agencies and pursued several investigations involving identity theft to commit tax fraud and Social Security fraud.
- Most recently, in January, a Florida man pled guilty to an identity theft scheme in which he claimed over $200,000 in fraudulent tax returns and over $25,000 in Social Security benefits. The thief obtained personal information for nearly 300 victims and used that to file 49 different tax returns, as well as to log in to SSA’s website to divert benefits to accounts he controlled. He faces up to 22 years in prison.
- Another Florida man, in December, was sentenced to two years in prison after he pled guilty to leading a scheme in Massachusetts to steal over $100,000 in government funds. He directed several co-conspirators to open bank accounts in the name of a fake business where they deposited, and immediately withdrew, Social Security benefits and tax refunds of people whose identities they had stolen.
- Yet another Florida man was sentenced in October to 76 months in prison and ordered to repay more than $321,000, after stealing $194,000 through 45 Social Security Retirement Income Benefit claims and $127,000 in fraudulent tax returns, all using stolen identities.
The moral of the story is that identity theft can be extremely harmful, and proper precautions need to be taken to avoid having it happen to you. As mentioned in our tax piece from last year, there are a few important steps that you or your family members can take to protect your tax returns and other personal information—like shredding copies of tax returns and draft calculation sheets, and thoroughly researching tax-preparation firms before handing over your information.
Of course, we’ll take this chance to remind you that there are several simple steps you can take to protect your personal information and your Social Security benefits:
- If you haven’t done so, you should establish a “my Social Security” account in your name to prevent someone from establishing a fraudulent account if they steal or obtain your personal information. You can do that at www.socialsecurity.gov/myaccount.
- Be aware of the prevalence of phishing and lottery schemes—no reputable financial institution or company will ask for upfront money in exchange for winnings; or for personal information like a Social Security number or bank account number via phone, mail, or the Internet. Also, SSA and other government agencies will not make unsolicited phone calls and request your personal information. If someone does call you and claims to be an SSA or government worker, ask for their name and number, and then call your local SSA or other government office to verify the caller’s identity.
- Regularly monitor all of your personal and financial accounts for any irregularities, and report fraud immediately to the appropriate agencies. If you do not receive a scheduled Social Security benefit payment, call Social Security toll free at 1-800-772-1213, 7 a.m. to 7 p.m. Monday through Friday (TTY 1-800-325-0778).
- Finally, if you do become a victim of identity theft, report it to your local police department and the Federal Trade Commission at www.idtheft.gov, a site that also provides helpful information on how to mitigate any damage.
- If someone else files a tax return using your personal information, visit http://www.irs.gov/uac/Taxpayer-Guide-to-Identity-Theft. And if someone makes unauthorized changes to your Social Security records, you can block all electronic access to those records at www.socialsecurity.gov/blockaccess.