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Tax season is underway and the Federal Trade Commission has designated this as Tax Identity Theft Awareness Week.

It’s an effort to educate people and help prevent them from becoming victims of identity theft.

Randy Hutchinson with the Better Business Bureau has tips on how to protect yourself.

What is tax identity theft?

Two forms:

  • Thief uses someone else’s Social Security Number to file a fraudulent tax return and get a refund. Victim may only learn about it after filing his own return and getting a notice from the IRS that one has already been filed in his name.
  • Thief, perhaps an illegal immigrant, uses someone else’s Social Security Number to get a job. Victim may only learn about it when she files her tax return and gets a notice from the IRS that she has under-reported her income.

How big is the problem? 

  • IRS initiated 1,492 criminal investigations in FY 2013:
    • 66% more than FY 2012.
    • 440% more than FY 2011.
    • IRS issued $4 billion in fraudulent refunds in 2012 – sent 655 refunds to a fraudulent address in Lithuania.

Give us examples of tax identity theft:

  • Rashia Wilson of Tampa, FL obtained over $2 million in fraudulent refunds from 2009 to 2012. IRS calls her the “First Lady” of tax fraud.
  • Six Memphis women pleaded guilty last year to filing over 800 fraudulent returns totaling $1.3 million. Some victims were local high school students.
  • Other crooks have stolen identities of deceased persons, residents of nursing homes, and inmates.
  • Some crooks recruit mail carriers to intercept fraudulent refunds that are mailed to victims’ addresses.
  • Some thieves are crooked tax preparers – one fellow used information from 51 clients to obtain $200,000 in fraudulent refunds.

What are signs that someone is a victim of tax identity theft?

You receive a notice from the IRS that:

  • More than one tax return was filed for you.
  • You have a balance due, a refund offset, or a collection action taken against you for a year you didn’t file a return.
  • IRS records indicate you received wages from an employer unknown to you.

What should people do if they become a victim of tax identity theft?

  • Contact the IRS immediately.
  • Consider filing a police report.
  • Consider putting a fraud alert on credit reports.

Any other advice to avoid tax identity fraud?

  • Choose a reputable tax preparer.
  • Don’t respond to unsolicited emails that appear to come from the IRS asking for information.

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