It is often said that imitation is the highest form of flattery. In most cases this may be true, but when it comes to your identity and personal information, it’s just plain illegal. Pretending to be someone you’re not is also known as identity fraud and is an all too common scam that can have lasting effects on your credit history. This type of scam is particularly prevalent around tax season. According to the Fair Trade Commission, tax identity theft happens when someone gets a tax refund or a job using a Social Security number that is not legally assigned to them.
As you know, income earners in the U.S. are required to pay taxes to the Internal Revenue Service (IRS) annually on or before April 15th. Many Americans look forward to this season because of the lump sum of money they expect to receive in return for over payment of taxes throughout the previous tax year. For this same reason, predators may be inclined to use the Social Security number, Tax ID number, or other personal identity information to fraudulently file with the hopes of receiving funds that are meant for someone else.
IRS figures show that over a thousand identity theft investigations were conducted in 2014. In 2013 there was a 66 percent increase in identity theft related criminal investigations over the previous year.
“Prosecution recommendations, indictments, and those convicted and sentenced for identity theft violations have increased dramatically since FY 2011. Sentences handed down for convictions relating to identity theft have been significant, ranging from two months to 317 months (irs.gov). ”
While these statistics can be startling, there is no need to panic. Along with tax season comes an influx in tax related fraud. Once the deadline mentioned above has come and gone it is reasonable to expect a decrease in the number of tax and refund related fraud incidents. However, identity theft and fraud will hardly disappear with the passing of tax season. With the constant innovation and invention of new, faster, more convenient, and automated ways to use technology to meet our personal and business commerce needs comes the inevitable advent of new ways for crooks to exploit those advancements. As the IRS and other agencies crack down on identity and tax fraud, thieves are steadily searching for new ways to turn a profit.
There are, however, some key ways that you can equip and protect yourself during this season and throughout the year!
- Check your credit card and bank statements regularly and avoid questionable links or sites.
- Monitor your credit regularly. Not only will this keep you on track towards LuxuriousCREDIT™, it can also prompt you sooner than later in the event your personal information is compromised.
- List all of your credit card and financial account numbers along with expiration dates and pertinent phone numbers and company contact information. This information should be filed in a secure place. This practice will allow you to alert your creditors quickly in order to prevent possible identity theft if your purse or wallet is ever lost or stolen.
- Closely monitor your credit and familiarize yourself with what should be appearing on it. Credit monitoring services are a great tool in this regard and can help prevent identity theft by alerting you when changes appear on your credit report.
- Be cautious with your personal information and aware of contacts and solicitations from potential scammers. The Federal Trade Commission (FTC) reports that Internal Revenue Service imposters are the #1 imposter scam and they’re on the rise. Fake agents using fake caller ID that may appear official and actually say “IRS” are contacting individuals demanding payments in the form of prepaid cards or wire transfers. These scammers may know several pieces of your personal information to include the last four digits of your Social Security number. They may even threaten and try to scare you with promises of wage garnishment, bank account levies, deportation, or worse. The best way to protect yourself from such fraud is to know the facts and know your rights.
The IRS will always initiate contact by postal letter, not a phone call. The IRS will never ask for payment in the form of prepaid cards or wire transfers, neither will they ask for your credit card information over the phone. If you receive such a call you can help put an end to this type of fraud by contacting the Treasury Inspector General for Tax Administration at tigta.gov. You may also file a formal complaint with the FTC at ftc.gov/complaint. Finally, you can always contact the IRS directly by calling 800-829-1040.
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