The IRS effort to combat identity theft couldn’t have come at a better time. With the IRS closing in on its goal of 80 percent e-filed returns (aided in part by the e-filing mandates on return preparers), the last thing it needs is a decline in confidence in the system. Yet that’s just what has happened, according to a survey commissioned by tax software developer Taxsoftware.com.
The survey found that the percentage of taxpayers concerned about filing their taxes from a desktop, laptop or iPad has spiked from last year, despite an overall drop in concern since 1997.
Along with the crackdown, the Service issued a map of national activity and press releases from the Department of Justice’s Tax Division and the U.S. Attorneys’ offices where the enforcement actions took place. The IRS also announced an IRS Identity Theft Protection Page at www.irs.gov/identitytheft, including a fact sheet, YouTube videos and the Taxpayer Guide to Identity Theft.
In addition to the law enforcement measures, the IRS has stepped up its internal reviews to spot false returns before tax refunds are issued. Although there were some initial glitches at the start of the filing season, resulting in slight delays of refunds of up to a week, the system is up and running and will hopefully result in a significant decrease in stolen refunds.
Meanwhile, there are steps both preparers and taxpayers can take, according to Michelle Cacdac-Jones, a spokesperson for credit reporting and monitoring service Equifax.
“Taxpayers should already know to be extremely cautious when giving out any personal information,” she said. “But they should also be advised to shred their mail. Don’t just throw it in the trash. This includes bank statements, junk mail and especially pre-approved credit card offers. Thieves will steal your mail, fill out the form for you, and open an account in your name.”
The practice of leaving outgoing mail in their mailbox should be discouraged, she added: “Deposit your mail in a locked collection box, and when you receive mail, make sure you remove it promptly.”
“Pay attention to your billing cycles,” she advised. “If you don’t receive a bill at its scheduled time, it’s possible that someone has taken over your credit card account and changed your billing address.”
The number of credit cards in your wallet should be kept to a minimum, she indicated: “You’re more likely to notice that a card is missing if you carry around fewer of them. And keep a close eye on purchases you make. With online banking and debit cards, it’s easy for purchases to show up that you didn’t make. It’s different than when you had to write checks for everything.”
There are black market sites that trade in stolen information, she noted: “Underground thieves pay money for this information and trade in it.”
‘If your tax refund is stolen, other things could be happening as well,” she observed. “Some thieves focus on tax returns because there could be large amounts of money involved. The only way you know is when it’s time to file your return, and it’s already been filed. That’s why these precautions are important—to prevent your identity from being stolen in the first place. If you catch it after the fact, you have to go through the whole hassle of undoing it.”
So the delay at the start of the filing season is a small price to pay for greater security.
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