Equifax Breach Could Lead To A Large Increase In Fake Tax Returns.
Article By : Patrick Mansfield | U.S. Consumer Finance
Nationwide credit reporting company Equifax says a cyber security breach compromised the personal data of as many as 143 million Americans.
Since the recent breach that exposed credit information, there is another problem stemming from credit bureau Equifax. Now, millions of Americans will have to worry about tax-related identity theft.
Among the information that was exposed during the Equifax hack were the Social Security numbers of 143 million individuals. After the breach was detected, many reacted and concentrated on fraud alerts, diligent monitoring, and freezing credit accounts so that criminals could not open new credit accounts in the names of the victims. However, experts state that consumers should now think about the upcoming tax season, which can see thieves using the stolen Social Security numbers to their advantage to create fake tax returns so that they can seize money that is not theirs.
It is important to note that just because you have credit monitoring or a freeze on your credit accounts, it doesn’t mean that identity theft cannot happen. Tax-related ID theft is known as being one of the top scams on the Internal Revenue Service’s “Dirty Dozen” list. In fact, the IRS has estimated that in the first nine months of 2016, there were stronger precautions made that helped to stop some 787,000 fraudulent tax returns that amounted to greater than $4 billion. In spite of those efforts, the IRS also reported that is paid $239 million in tax refunds that are suspected to be fraudulent.
At this point, there is no telling what the Equifax breach may have in store for the 2018 tax filing season.
A spokesman for the IRS reported that the agency is continuously reviewing and assessing the situation to ensure that it takes the necessary next steps.
No doubt, anyone reading this is wondering what they can do moving forward.
First of all, the unfortunate thing is that the protections that the IRS has at the moment, specifically, filing an affidavit stating identity theft or obtaining a PIN for filing taxes are options for victims of tax identity theft. If only your Social Security number was exposed in the Equifax breach, it will not be enough to be protected. The IRS specifically states in its taxpayer resource that not every breach ends up with identity theft and that not every identity theft involves taxes.
Although the risks are high, there are ways to mitigate them before tax time officially arrives. Filing early can protect you because you might be beating potential thieves to the punch as the IRS will recognize that yours is the legitimate tax return. Here are some tips for being better organized:
Review your most recent tax return so that you can get a good idea of what to expect regarding deductibles and the official documents you will need. Make a note of any changes, such as a salary increase or decrease, new job or whether you have opened an investment account.
List the documents you will need and take the initiative to call or send out an email to track down any documents that may be late.
If you moved during the year, contact employers, financial institutions, and other companies so they can send you any pertinent documents or forms and make sure they have your current address and phone number.
Gather up receipts and other documents that prove your deductibles for business-related expenses or charitable contributions.
Check your online accounts and take note that some entities only make documents available online, while others may send them to you via regular mail.
You should also keep an eye on your tax record to ensure that everything looks right. The IRS gives taxpayers online access so that they can view the details of their tax account. This ensures that if someone else files in your name, you will see it faster and can take action faster as well.
However, the best defense you have against tax thieves is to adjust your refund. Look at your W-4 and change your allocations. For example, if you adjust accordingly, you can receive $100 in your refund instead of $1,000. Take care using this method, though, because it can result in owing more money than you expect.
You can also use a PIN to prevent a criminal from filing a fake tax return using your Social Security number. Always be proactive and watch for any red flags. It’s the best way to protect yourself and take action against fraud.
Quick Summary - What You Need To Know:
1. Equifax is offering credit file monitoring and identity theft protection. To enroll, you need to submit your name and last six digits of your Social Security number.