The second most common reason consumers contacted the Identity Theft Resource Center for help in 2014 was for government identity theft. This type of identity theft covers a variety of issues, including employment fraud (someone steals your identity to get a job) and benefits fraud (someone uses your information to apply for fraudulent government benefits). But all too often, it refers to the crime of tax refund fraud, one of the increasingly common forms of identity theft.
How big is this problem? The IRS paid out an estimated of $5.2 billion dollars in fraudulent refunds in 2013, and so far none of the proposed tactics for putting an end to this kind of waste has been viable, meaning there’s no end in sight, at least not in the near future.
Part of the problem with solving tax refund fraud is that it’s isn't easy. The government relies on Social Security numbers (SSN) and birthdates, two of the most commonly accessed pieces of identifying information that are readily available. The other problem is that citizens can request their refunds be paid out in the form of an electronic transfer to a prepaid debit card, making the money untraceable once it’s paid.
But there are things you can do to limit the opportunity for tax refund fraud:
1. Know Where Your Number Goes - If you’ve been handing over your SSN to medical offices, schools, or other businesses that really have no need of it, now’s the time to get it back and ask them to delete it from their records. You are allowed to refuse to supply this number to anyone who wants to use it strictly for identification purposes.
2. Get It Out Of Your Wallet—Never carry your Social Security card in your wallet. Look to see if you have other forms of ID like a college student ID card, your health insurance card, or Medicare card that have the number printed on there. If you do, secure it at home, but know that you may have to retrieve the original if you need it.
3. Monitor Your Statements—Hopefully you’re aware that you really need to look over your bank and credit card statements, and that you need to shred these items before you discard them. But are you looking at your Social Security statement? All too often, it gets tossed in a drawer, or worse, tossed in the trash. But that statement can tell you if someone is using your SSN for employment, which can then lead that individual to file a tax return in your name.
4. File Early—Tax identity thieves are able to carry out their plans because they get started early. File your return as quickly as possible in order to beat them to it. If a thief gets there first, your legitimate return will be rejected for having a return already filed under your SSN.
Remember that taking a little bit of action before a problem arises can prevent a host of issues down the road. Protect yourself and your identity, and protect your tax return.
Eva Velasquez is president and CEO of the Identity Theft Resource Center.