Income Tax Fraud: How to Protect Yourself
- By Dean Jay Williams
Nationwide, many taxpayers have attempted to file their federal and state income tax returns, only to find out that criminals have already filed fraudulent returns and claimed refunds. The Vermont Department of Taxes explains:
Refund fraud occurs when a criminal uses stolen identification of a taxpayer, including Social Security Number, to create a phony return. Often the criminal will use software to generate fraudulent returns in multiple states using the same stolen identification. Identity theft is a well-known problem, and can result from a data breach, scam, or loss of a wallet.
Last year, the IRS reported 875,000 cases of tax identity theft, and news reports indicate that fraud continues at a high rate this tax season. UVM is aware of fewer than two dozen employees who have been victims of this type of fraud. There are numerous potential sources of the personal information needed to file a tax return, and investigations into the cases reported by UVM employees, which are continuing, have not shown evidence of a compromise of UVM databases or information systems. Stolen personal information, such as Social Security numbers stolen in widely reported corporate breaches, is readily available in underground marketplaces, and finding additional information such as employer EINs is facilitated by free online databases.
How to Protect Yourself
If you're notified by the IRS or a state tax department that someone has filed a fraudulent tax return in your name, take these steps to resolve the issue and protect yourself:
- File a report with law enforcement (your local police department)
- File a complaint with the Federal Trade Commission
- Respond immediately to any IRS notice
- Complete IRS Form 14039, Identity Theft Affidavit
- Continue to pay your taxes and file your tax return, even if you must do so by paper
- Contact one of the three major credit bureaus to place a fraud alert on your credit records
- Notify UVM's Information Security Operations Team at firstname.lastname@example.org, or UVM Police Services
You may also want to:
- Contact your financial institutions, and close any accounts opened without your permission or tampered with
- Check your Social Security Administration earnings statement annually
If you've been notified by a company or organization that your personal information has been compromised, even if you're not a victim of tax return fraud, follow the steps above with the exception of the IRS-specific items.
Additional sources of information and guidance:
Please contact the Information Security Operations Team at email@example.com with any questions, concerns, or suggestions.