The problem of identity theft has grown so enormous that billions of taxpayers have become victims of identity theft over the years. In 2011 alone, the IRS paid $5 billion in fraudulently claimed tax refunds. The future is looking worse. According to an estimate, more than $20 billion could reach the pockets of tax thieves in the form of tax refunds in the next five years. That spells trouble for taxpayers and the government.
What you can do
- · Never share your social security number, birthdate, bank account information and financial details on unverified online platforms.
- · Never click on links in emails that look as if they are from the IRS, your bank or a reputed institution. These are spammers who send fake emails to obtain sensitive information from you that they can use to claim tax refunds in your name. Search for Phishing on the Internet. You will value the information you get.
- · Always choose a tax preparer that has a PTIN (Preparer Tax Identification Number). This number is used to track tax preparers that file fraudulent tax returns to claim exaggerated refunds.
If you become a victim of identity theft, and your identity is used for claiming refunds, you will come to know of it only when the IRS sends a letter your way informing you that you have already filed your tax return.
With identity theft reaching the top spot on the IRS Dirty Dozen Tax Scams for 2012, you might wonder:
What is the IRS doing?
The IRS is furnishing stats to show you that they are trying to fix the problem.
- · The IRS has stopped around $12 billion in confirmed identity theft threats in 2012.
- · Last year, they detected about 940,000 fraudulent tax returns that saved $6.5 billion in tax refunds from reaching the pockets of scammers.
But this is not enough, it seems, because the country is losing billions of dollars every year to fraudulent refunds despite the monitoring and audits of the IRS. More than a million cases of identity theft remain undetected each year.
While waiting for the IRS to beat the scammers, help yourself. Make it a habit to think twice before sharing your personal and financial information with strangers.