The deadline for individual income tax returns to be filed in the United States passed this week. The U.S. Internal Revenue Service is expecting that, amid the torrent of more than 146 million individual tax returns it will receive, many online, millions will have been filed using stolen social security numbers and other personal information. In 2011, says the Treasury Department’s inspector general for tax administration, there were 1.5 million successful attempts to fraudulently collect money with faked tax returns. They cost the government an estimated US $5 billion, not including the cost of trying to identify the instances of fraud and tracking down the perpetrators. Last year, crooks made off with 1.8 million ill-gotten refunds.
Welcome to "stolen identity refund fraud." In a typical case, a thief steals someone's Social Security number or other personal information, and uses it to file a fraudulent tax return seeking a refund.
This type of fraud has increased rapidly in recent years and now is "massive" in scope, says Kathy Keneally, the U.S. Justice Department's assistant attorney general for the tax division. This is a "remarkably simple crime to commit," Ms. Keneally said at a recent conference of the New York University School of Continuing and Professional Studies. She and other officials say the government has taken major steps to combat these scams and considers this issue to be a top priority.
Here are a few suggestions on how to reduce your chances of getting stung:
Beware of phony emails that appear to be from the Internal Revenue Service. Some bogus "phishing" emails claim that you're entitled to a refund and that you can get it by clicking on a website and sending your personal information.
The IRS says it doesn't initiate contact with taxpayers, either by email or social-media tools, to ask for personal or financial information.
Shred documents containing personal, financial and medical information when you no longer need them, the Federal Trade Commission says. Some thieves collect information by dumpster diving.
Don't carry your Social Security card with you.
Monitor your credit report regularly.
Act quickly if you suspect trouble. For example, the IRS says, suppose your wallet is lost or stolen, or you detect worrisome activity on a credit-card account or a credit report. In such cases, "you are encouraged to contact the IRS at the Identity Protection Specialized Unit, toll-free at 1-800-908-4490 so we can take steps to further secure your account."
Be careful if you hire someone to do your tax return. Some paid preparers have received stiff prison sentences for identity theft.
For more information, go to the websites of the FTC (www.ftc.gov/idtheft) and IRS (www.irs.gov).
The IRS estimates that 1.3 million tax returns were related to identity theft in 2011, a spokeswoman says.
"We are all victims because tax dollars are going out the door," Ms. Keneally said at the NYU conference.
By TOM HERMAN