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How to Avoid Being A Victim of Tax-Identity Theft

The moment someone steals and uses your Social Security number to process a tax return claim or a refund is what we call Tax-identity theft. Most of the time victims are not aware that their identity has been stolen until they electronically file (e-file) their tax returns or they receive a notice warning them that the Internal Revenue Service may have identified a suspicious transaction using their Social Security Number. Here is more information on this foul epidemic that can help you avoid identity theft:

What is an E-file?

Tax E-filing is a system where citizens can submit their tax documents via the Internet or direct connection. Basically, it is submitting paperless documents to the US Internal Revenue Service. The taxpayers can use the IRS free file service by utilizing the IRS e-file provider software or by using the IRS “fill in the blank” forms posted online.

Although the Free File is a service found in IRS, the company that manages and operates this service is the Free File Alliance. This is an association of private tax-preparation companies. Since its launch in 2003, the Free File gained above 46 million users. For this year, Free file will be available on January 15 and will end on October 15. IRS has many partnerships with different companies to provide electronic filing system to the public but it does not force nor advertise a particular software company to the taxpayers.

Tax Identity-Theft on the Rise

The IRS paid out almost $ 6 billion in fraudulent refunds in 2013. The following year, 32.8% of all identity theft is from taxes or wages. And just last year, the numbers climbed to a 50% increase in identity-theft reports according to the Federal Trade Commission. The big chunk of the complaints involves tax refund fraud.

To address this, the IRS having been committed to detect and respond to system hacks,and now issues a unique six-digit PIN numbers aimed to add protection to the victims of identity theft. Fortunately, for the taxpayers in Florida, Georgia and the District of Columbia, they can opt to apply for IP PIN program for their added security. However, despite of this precaution, hackers were able to find their way into the IP PIN program.

How is Tax-Identity Theft done?

The use of one’s Social Security number, a hoaxed W-2 form and the use of other’s residential address to request a huge refund is the most common way to steal one’s tax-identity. This is also the most pervasive method use by the majority of tax-identity frauds.

Another common way thieves steal your tax-identity is by contacting you by phone, email or chat identifying themselves as officials from the IRS. This is a bait in order for the victim to divulge their personal information. Sometimes the scam artist will threaten the taxpayer with arrest unless the victim pays some portion of the amount “owed” and often by credit card.

What can you do to avoid Tax identity theft?

Since the IRS process claims on a first come first out basis, it is recommended that you file your return as early as you can. Make sure also that your security software has a good firewall and protection against malware and viruses.

In making online accounts, make sure to have strong passwords. Do not be lax in creating a password from your own birth dates. Make sure to mix an upper and lowercase letters as well as symbols and numbers to make it a strong one.

Do not carry your social security number around with you. Most importantly, never click on online links or download attachments if you are not sure of the credibility of the sender or site you are in.

What if you think you have already been the victim of tax identity theft?

If you receive a notice from the IRS for a tax return you have not submitted, this indicates that you may have been a victim of fraud. (Hence the advice to file as early as you can.) If you do not receive a refund you were expecting in a timely manner, this too could indicate you have been a victim of this crime.

Know that the IRS never acts quickly. Contact with the Internal Revenue Service almost always begins with letters, not telephone calls and certainly not e-mails. If you are contacted by telephone, e-mail or chat you are best off by not responding in any way. If you are being pressured to pay quickly, and without the opportunity to appeal, chances are that you are NOT being contacted by the IRS. If you feel that there may be some legitimate concern with your tax return, look up the official telephone number for the Internal Revenue Service and contact them directly.

If in case you become a victim of tax-identity theft or maybe you know of someone, please contact our team today. TeamGreenLawyers will be willing to assist you in your inquiries and concerns. Be wise and not too trustful with your personal information.