By: Ashley Fieber, Vice President of Operations and Fraud, VyStar Credit Union
Stolen identity tax refund fraud has been on the rise since 2008. Historically, this type of fraud occurs when a criminal steals the identity of a victim, files a bogus tax return in their name before they can do so, and collects on the refund from the Internal Revenue Service (IRS). Stolen identity tax refund fraud is prevalent due to the fact that it is so easy to commit. All one needs is access to the Internet, a stolen Social Security number and the date of birth associated with the Social Security number. The unsuspecting victim will discover that they have been defrauded after attempting to file their claim and are unable to do so because one has already been filed for them.
The best way to protect yourself from stolen identity tax refund fraud is to file your taxes as early as possible. You can only file one return per Social Security number; therefore, any subsequent return would be rejected. Some other ways to protect yourself include the following:
If you do believe your information was stolen, contact one of the three major credit bureaus (Experian, Equifax or TransUnion) to place a fraud alert on your credit record, and then fill out and mail in the IRS Form 14039, Identity Theft Affidavit.
The IRS also warns taxpayers to be aware of another new scam on the rise that involves bogus tax refunds being deposited into real taxpayer bank accounts. Once the funds are posted, the criminal utilizes various strategies to con taxpayers into turning the funds over to them. One of these common schemes involves the criminal calling the victim stating that they are an IRS representative. The victim is then threatened with criminal charges if they do not send the funds back to the caller. Victims typically fall prey to this scam because there is a bogus return in their account, making this claim look more plausible. (It is important to note that the IRS will not initiate contact with you by phone or email to discuss your account.)
If you fall victim to this type of scam, immediately contact your financial institution to discuss further details. Also, contact your tax preparers to inform them of what happened.