Most Americans rank filing their annual taxes right up there with a visit to the dentist. It's tedious and occasionally painful, but it must be done. However, as with both filing your taxes and going to the dentist, the sense of accomplishment when you're finished can be rewarding.
For an increasing number of taxpayers, that sense of completion is, unfortunately, being short-circuited by thieves: After filing legitimate tax returns with their state or federal IRS, they may receive notice that someone has already filed a tax return in their name—and that a refund has already been issued.
Since we're in the midst of those important tax forms going out and other personal information changing hands, it's good to think about filing your taxes and the opportunity identity thieves see during this time.
All it takes for an identity thief to file a fraudulent tax return is your name, birthdate, and Social Security number—pieces of information which may be readily available if your identifying information has ever been stolen in a data breach.
If someone has beaten you to the punch, then you may face serious delays in filing your genuine return, while also tackling the seemingly insurmountable task of proving you were not the one who filed the fraudulent return. For too many victims of this specific type of identity theft, finding out they've been stolen from is devastating and is often just the start of a series of unforeseen domino effects in the aftermath of the crime.
As recently as 2014, tax refund fraud was the single-most reported crime to the Federal Trade Commission, and cost the government more than $5 billion a year.
Fortunately, the IRS has implemented some new strategies that have already begun to put a dent in tax refund fraud, but that doesn't mean consumers can't take a few extra precautions to help secure their returns:
1. File as Early as Possible
Many identity thieves already have the information they need to file fraudulent returns, and they know they have to get to your tax return before you do. The sooner you can file your legitimate return, the better the chances that your return will be the one the IRS recognizes.
2. Be Extra Careful if You Know Your Information Has Been Stolen
If you've received a data breach notification letter in the past, then your identifying information may already be in a criminal's hands. That doesn't mean you give up, of course; instead, it means you work a little extra to make sure you're staying on top of your accounts and your credit reports.
3. Report It as Soon as You See Something Suspicious
If you receive any kind of notice from the IRS that indicates someone may have filed in your name, then report it immediately to the IRS. Start with the Federal Trade Commission and the Identity Theft Resource Center's toll-free call center. Both of those organizations can point you in the right direction.
Remember, if someone has access to your personally identifiable information (PII) and has used it to defraud the government, then there's a very real chance they'll use it for other types of identity theft, like new account fraud or medical identity theft. Once you learn of any kind of crime involving your data, be on the lookout for signs of other fraudulent use and take immediate action.
For more protection tips and other resources, visit the FTC's annual Tax Identity Theft Awareness Week website.
About the Author: Eva Velasquez is the President and CEO of the Identity Theft Resource Center. She has a passion for consumer protection and educating the public about identity theft, privacy, scams and fraud, and other related issues and is recognized as a national expert on these topics.
Experian proudly provides financial support to the Identity Theft Resource Center.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on January 25, 2018, and has been updated.