Most people think of recent credit card breaches at major retailers when they hear the phrase “identity theft.” According to the federal government, however, tax-related fraud is now the biggest category of ID theft complaints in the United States.
According to the Federal Trade Commission:
“Identity theft has been the top consumer complaint to the FTC for 13 consecutive years, and tax identity theft has been an increasing share of the Commission’s identity theft complaints. In 2010, tax identity theft accounted for just 15 percent of the FTC’s identity theft complaints from consumers, while in 2011 it made up 24 percent of the overall identity theft complaints. In 2012, tax identity theft accounted for more than 43 percent of the identity theft complaints, making it the largest category of identity theft complaints by a substantial margin.”
The Internal Revenue Service also reports increases in criminal investigations of identity theft linked to taxes:
“The IRS continues to increase its efforts against refund fraud, which includes identity theft. As a result of these aggressive efforts to combat identity theft from 2011 through November 2013, the IRS has stopped 14.6 million suspicious returns, and protected over $50 billion in fraudulent refunds.”
The IRS also listed tax-related identity theft at the top of its “Dirty Dozen” list of tax scams this year.
This week’s press release from the Consumer Fraud Task Force shone the spotlight on tax-related identity theft, including several criminal cases of people filing fraudulent returns based on stolen identities. The task force, which comprises local, state, federal and nonprofit agencies, seeks to alert consumers to fraud potential and offers advice on avoiding fraud. St. Louis BBB is a member of the task force.
Often the first sign that a consumer receives that someone has committed tax fraud is a letter from the IRS notifying them that someone has filed a tax return using their personal information or that the IRS has information on income from an employer that the consumer has never worked for or doesn’t know. Consumers should respond promptly to such letters, so the error can be corrected and the fraud can be investigated.
If you detect the fraud without getting a letter from the IRS, the agency has a page on its website with resources for reporting fraud.