E-filing your tax return is a quick and easy method preferred by the IRS—and scammers, too.
With a computer and your personal information—name, address, birth date and Social Security number—criminals can e-file a fraudulent tax return to claim your refund. Already netting scammers billions in bogus refunds, it’s a crime that’s high
By electronically filing tax returns that indicate an entitled refund, identity thieves need no W-2s or other tax forms, just the personal identifiers of legitimate taxpayers. Refunds for e-file returns are typically issued within 21 days of IRS receipt, although it can take several months for the IRS to actually receive and “document-match” tax-related paperwork such as employer-provided W-2s and 1099s with claims made on a tax return.
So by the time the tax identity theft is discovered, it’s too late. The bad guys have secured the taxpayer’s refund either by having the money deposited directly into a bank account, sent as a Treasury check (often mailed to a vacant home and cashed at unscrupulous businesses), or preloaded to a debit card so the funds can be withdrawn from ATMs.
As crooks get thousands of dollars per fake return, taxpayers are left with a time-consuming and hassle-filled ordeal to prove their own identity to get their entitled refund. Victims are not responsible for stolen money and eventually will get their entitled refund, but it can take time.
This type of tax-related identity theft is often done by organized crime rings and street gangs. In some areas, classes are held by identity thief instructors who, for a commission of stolen funds, teach students how to collect fake identifies to file bogus tax returns.
Victims include everyday taxpayers; children; elderly and disabled people, who aren’t required to file returns (and whose Social Security benefits may be jeopardized after scammers report fake self-employment income under their fake returns); or even the dead, whose info can be gleaned online from ancestry websites, published obituaries and the Social Security Death Master File.
How to protect yourself:
Brett Montgomery is a fraud operations manager at IDentity Theft 911.