Taxpayers are increasingly aware of identity theft-related tax fraud this year and are concerned about becoming victims, according to a new survey.

The credit-reporting company Experian recently polled consumers across the country about their tax-filing habits, identity theft and what they are doing to protect themselves this tax season as part of an annual survey.

The number of survey respondents familiar with identity theft and tax fraud has risen nearly 20 percent in the past two years, to 76 percent, compared with only 57 percent in 2014 and 63 percent in 2015. In addition, 42 percent of respondents said they are now concerned that someone could access their personal data through their tax return, compared to only 35 percent in 2014 and 38 percent in 2015.

While 28 percent of respondents have been a victim or know someone who has been a victim of tax fraud, only 6 percent said they file their taxes on a computer with up-to-date antivirus software.
Those who have been affected by tax fraud most commonly file a police report (59 percent) and place a fraud alert on their credit reports (58 percent).

Despite the number of people affected by tax fraud, almost half of respondents (45 percent) aren’t aware of the IRS-issued Identify Protection PIN, or IP PIN, a unique number assigned to eligible taxpayers that helps prevent the misuse of their Social Security number and protects against thieves attempting to file fraudulent federal income tax returns. Furthermore, only 30 percent of actual victims surveyed requested the IRS-issued IP PIN last year.

Even though the concern over tax fraud has grown significantly, a majority of survey respondents aren’t planning to take the IRS recommended steps to protect themselves. Only 12 percent are planning to check their credit report, an important first step in monitoring for fraudulent activity that could indicate identity theft. 

“Tax season is a busy time of year for identity thieves,” said Experian vice president of consumer protection Michael Bruemmer in a statement. “Those filing taxes, especially electronically, should educate themselves on what precautions need to be taken, and what assistance is available to them if they become a victim of identity theft.”

Half of the respondents file their taxes themselves, electronically. Eighteen percent scan and save their tax documents electronically, up from 14 percent in 2015. More than three-quarters have used electronic fund transfers for tax refunds.

Of the 56 percent of respondents who prepare their own taxes, most prepare their taxes on their home network. Seventy-six percent of them said they file their taxes inside their own home, on a secure network, while 14 percent file their taxes while at work via a secure network, and 7 percent file their taxes outside their home over a free Wi-Fi network (not recommended as free Wi-Fi networks often have security vulnerabilities).

Most of the survey respondents (80 percent) expect to receive a tax refund and plan to use it to increase their personal savings or pay down credit card debt. Forty-one percent said the tax refund would go into a savings fund or investment, 35 percent said they would use the money to pay off or pay down their credit card debt, and 19 percent said they would use it to pay off or pay down personal loans.

For the full survey results, click here.

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