Feature Article
Mark Pribish
How to Avoid Taxpayer ID Theft and Fraud
By Mark Pribish
Vice President and ID Theft Practice Leader

As many of you know, February 1st marked the start of the 2014 tax filing season.

Last year, I wrote an article on how the IRS has struggled to curb taxpayer identity theft and refund fraud (please see here) with over 1.2 million tax-related identity theft incidents since 2008.

In 2013, the Treasury Inspector General released a report on how the U.S. Internal Revenue Service (IRS) issued $3.6 billion in fraudulent tax refunds in 2012 (please see here) where most of the $3.6 billion was sent to identity theft thieves who stole Social Security numbers and taxpayer related information from U.S. citizens to file fraudulent tax returns to steal said refunds.

Unfortunately, taxpayer identity theft and refund fraud happens when identity criminals steal the Personally Identifiable Information (PII) of taxpayers and file fraudulent refunds in their names. When the real taxpayers file, their refunds aren't paid until the IRS resolves their individual case.

Avoid Tax Fraud

According to the Federal Trade Commission (FTC), the problem of taxpayer ID Theft and fraud continued to get worse over the last three years including:

  • 2010: 15.6% of all ID theft complaints were rooted in taxes or wages
  • 2011: 24.1% of all ID theft complaints pertained to taxes or wages
  • 2012: 43.4% of all ID theft complaints pertained to taxes or wages

So what can individual taxpayers do to minimize their risk of becoming an ID Theft victim during the 2014 tax filing season?

First, every individual needs to remember that their tax filing documents from employers, financial institutions, financial services firms, healthcare providers, insurance companies along with others are often sent via the U.S. Post Office and email.

Thus identity theft thieves will try to steal your personal information from the U.S. Post Office, your mailbox or your personal and business email accounts.

That said, the IRS has provided the below tips for taxpayers as the IRS continues to take new steps and strong actions to protect taxpayers and help victims of identity theft and refund fraud (see further details here).

  • Don't carry your Social Security card or any documents that include your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
  • Don't give a business your SSN or ITIN 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 and anti-spam/virus software, updating security patches and changing 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.

Finally, if you believe you are an ID Theft victim or are at risk of becoming an ID Theft victim due to your personal taxes or a lost or stolen purse or wallet, questionable credit card activity or credit report, you can take the following action:

  1. Contact the IRS Identity Protection Specialized Unit at 800-908-4490, extension 245.
  2. Complete the IRS Identity Theft Affidavit, Form 14039.
  3. Report incidents of at www.consumer.ftc.gov or the FTC Identity Theft hotline at 877-438-4338
  4. File a report with the local police.
  5. Contact the fraud departments of the three major credit bureaus:
  6. Taxpayer Guide to Identity Theft -- http://www.irs.gov/uac/Taxpayer-Guide-to-Identity-Theft


To learn more about these threats and how to protect yourself and your family from Identity Theft, you can read my past newsletters at the Merchants Identity Theft Educational Website at www.idtheftedu.com.

Scam Central

Phony Funeral Fanfare for a Friend

The loss of a loved one or a good friend brings sadness into everyone's lives, and just hearing about the loss can be a heartbreaking experience. Too often, the way in which we are notified of an individual's death can be almost as devastating as the news of the death itself. For example, if Uncle Fred passes away and you hear about it from a friend, you would wonder why Aunt Rita, your cousins, or your own parents did not call to let you know personally. Or, you may wonder why you were the last person to hear the news when you were so close to Uncle Fred.

The main reason for the seemingly impersonal notifications is rather simple. Over the last decade or so, technology has greatly expanded the way in which we communicate. Some people find it easier to send a text message or an email rather than have to actually pick up the phone and talk with somebody. And, to the credit of technology, Facebook and Twitter allow us to reach a wider audience of hundreds, or perhaps thousands with a single sentence, instantly, from a smartphone. We have become so reliant on these technologies and so used to receiving such impersonal communications that it really would not be surprising to learn of the death of a loved one over an email.

How It Works:

Imagine that instead of receiving a phone call from a friend or family member, you receive an email from a funeral home informing you that a friend or loved one has passed away and that you have been invited to participate in celebrating their memory. The email does not specify exactly who that friend or loved one is, but rather has some general information about when funeral services will be held. The email also provides a link so that you may visit the funeral home's website for further details.

Not surprisingly, the provided link is not to the funeral homes website, but rather to a foreign website that may download malware onto your computer. Once that malware is in place, the scammer has access to personal information stored on your computer, and identity theft is sure to follow. You can read more about this scam on the Better Business Bureau's website.

Your Defense:

The thought of not receiving a personal phone call or visit from someone to tell you about a loved one or friend's passing is enough to make anyone want to click on the link to find out more information. At the very least, you may want to find out who has died. But don't click the link! Just like a friend or family member's passing, clicking on this link will also bring heartache, but in the form of identity theft.

Delete these types of emails. A legitimate notification would have at least told you who it was that passed away in the message. Also, how did the funeral home know to contact you about this individual's passing? Did they leave a list before they died? Did a family member give them a list? It just does not make sense. Funeral homes are usually not the ones to initiate the delivery of bad news, unless they are providing the obituary notice to a newspaper or online service.

The Better Business Bureau offers up the following tips to help avoid becoming a victim of this and other types of email scams.

  • Don't believe what you see. Scammers can easily copy a real business' colors, logos and even email addresses.
  • Hover over links. Place your mouse over hyper-linked text and the true destination will appear.
  • Be wary of unexpected emails that contain links or attachments. Do not click on links or open files from unfamiliar emails.
  • Beware of pop-ups. Some pop-ups are designed to look like they've originated from your computer. If you see a pop-up that warns of a problem that needs to be fixed with an extreme level of urgency, it may be a scam.
  • Watch for poor grammar and spelling. Scam emails often are riddled with typos.
  • Ignore calls for immediate action. Scam emails try to get you to act before you think by creating a sense of urgency. Don't fall for it.

While we cannot provide an exhaustive listing of every possible scam, using the above tips from the Better Business Bureau are sure to help you steer clear of most scams. Be vigilant and stay alert.

If you believe you are a victim of the Target data breach, you may contact your credit card company and bank to have new cards issued. You may even consider changing your PIN number for good measure.

Be alert, and stay safe.

If you believe your identity has been stolen, call 866.SMART68 today.