Tax time is here: Jan. 30 marked the first date that Americans can file their 2012 income taxes. This year, the IRS is tackling a problem that is growing rapidly: tax-related identity theft.
This type of ID theft occurs when thieves steal your social security number, file a false tax return and collect your refund. Thieves usually submit these fraudulent returns early in the filing season, before the legitimate taxpayer files.
Tax-related identity theft incidents are exploding. According to the latest GAO report, the IRS identified 47,730 incidents in 2008. That number grew five-fold in three years to 242,142 reports in 2011. Through just nine months of 2012, there were already 641,690 incidents.
This results in tremendous headaches for the people who have their identities stolen since it can take months to rectify the situation.
But it also causes incredible problems for the IRS. Last year, the IRS inspector general, J. Russell George, told CNBC that the IRS may issue up to $21 billion in fraudulent tax returns in the next five years.
In the past, the IRS has not had the manpower to keep up with this type of fraud. Thieves greatly outnumber IRS agents and are known to direct multiple fraudulent returns to one address, then change the address when agents catch on. One address in Lansing, Michigan received over 2,100 returns amounting to over $3.3 million in tax returns.
But the IRS is now stepping up their efforts to combat this tax-related identity theft.
* The IRS has doubled the number of employees assigned to tax-related ID theft in the past year to over 3,000.
* The agency has trained 35,000 employees who work with taxpayers to recognize identity theft indicators and help people victimized by identity theft.
* The IRS has activated dozens of new identity theft filters.
* A substantial increase in the number of identity theft investigations instituted by the IRS Criminal Investigations.
* The IRS is working with over 130 financial institutions to identify identity theft fraud schemes and block refunds from reaching the hands of identity thieves.
The IRS also recommends that consumers take the following steps to protect themselves from identity theft:
* Don't carry your Social Security card or any document(s) with your SSN on it.
* Don't give a business your SSN just because they ask. Give it only when required.
* Protect your financial information.
* Check your credit report every 12 months.
* Secure personal information in your home.
* Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts.
* Don't give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.
For more information go to www.lowcards.com