In so many ways, 2017 was a wild year. One of the lowlights was the theft of data on more than 145 million Americans from credit monitoring service Equifax. In addition to the Equifax breach, which exposed the personal data of half the country’s adults, thousands of other smaller attacks have occurred in recent years, including the Office of Personnel Management (OPM), Target, LinkedIn, and Yahoo breaches, potentially exposing every American to the threat of identity theft.
One of the places this could cost you financially is in the possible theft of your tax refund. And according to CNBC, having a credit freeze or other type of credit monitoring service in place will not prevent tax-related identity theft. The IRS allows only one tax return per Social Security number per year, but your name, birthdate and SSN are the only data points cybercriminals need to file a return in your name.
Two weeks from today, Jan. 29, is the official start of tax season according to the IRS. And the best way to prevent the theft of your tax return is to file as quickly as possible.
Think it can’t happen to you? According to a 2016 General Accounting Office (GAO) report, the IRS paid out $3.1 billion in fraudulent refunds to identity thieves in 2014. The IRS’s Taxpayer Advocate Service (an ombudsman for taxpayers within the IRS) reports that at the end of 2015, it had over 600,000 identity theft cases with taxpayer impact in its inventory, which was nearly 2½ times its inventory in 2014.
Each year the IRS takes steps to decrease the likelihood that you’ll be a victim of this kind of theft, but as always, the crooks are often several steps ahead of cybersecurity measures. For 2018, they’ve attempted to coordinate with states and the tax industry to implement new safeguards. They’re also working with banks to help stop the processing of stolen refunds.
But your best bet is to file as soon as you have all your paperwork. Employers are required to mail W-2s and 1099 forms by 31 January, but banks and brokerage firms may have later deadlines. For example, investment 1099s for dividends and interest may not show up until the middle of February.
Nevertheless, you can get all your paperwork together now, and if you’re doing it yourself, you can perform all the calculations and fill out all the forms so you’re ready to hit the “send” button as soon as you have everything in hand. You can also make a list of all the forms you need so you’ll be aware of what hasn’t arrived and take steps to track down any that might be missing.
If you do become a victim of this type of identity theft, you will eventually receive your correct refund, but it could take months. You’ll be required to file an affidavit (Form 14039) along with a good deal of supporting documentation and wait while the IRS sorts through the confusion.
You may have heard that you can receive an identity-protecting PIN from the IRS to prevent this type of fraud. Unfortunately, simply being a victim of identity theft will not enable you to receive this type of protection. You must already have been the victim of tax-return theft in order to get it, or you have to live in Florida, Georgia, or Washington, D.C., where the government is running a pilot program, CNBC reports.
So your best bet is to file as early as you can. “Our motto is, file first and beat the crooks,” Eva Velasquez, chief executive and president of Identity Resource Center, told CNBC. “It does have an impact. You are not giving them an open window.”
Meanwhile, check with Billshark regularly, as we strive to keep you abreast of the myriad financial issues that impact you. And, if you haven’t already, sign up with us to let us save hundreds of dollars on your bills.