Some members of the United States Congress want to pass a law that cracks down on tax return identity theft, after the Internal Revenue Service (IRS) revealed that it sent an estimated $5.2 million in fraudulent returns to cyber-criminals last year. The bill, which has already passed the House of Representatives, would sentence people convicted of this kind of identity theft to as much as 20 years in prison.
“Over the past several years, we’ve seen tax return identity theft explode into a nationwide epidemic,” bill sponsor Debbie Wasserman Schultz (D-Fla.) tells Congressional news source The Hill. “We cannot allow billions of taxpayer dollars to be stolen from hardworking Americans and from our Treasury.”
Wasserman Schultz represents Florida, which many say is ground zero for identity theft and credit fraud. Ft. Lauderdale-area Detective Mitch Gordon tells the Florida Sun Sentinel newspaper that the problem has reached epidemic proportions.
“We’ve gotten thousands of complaints just in Broward County alone," he tells the source. "It’s all over the state — Tampa, Orlando, South Florida — major problems. We find people walking around with hundreds of names and Social Security numbers. One Social Security number could be worth $10,000. The potential loss is great. And if [fraudsters ] get a slap on the wrist, they will do it again.”
Wasserman Schultz says that right now thieves see this kind of tax fraud as a lucrative endeavor with relatively little risk. She believes that upping the stakes when it comes to sentencing will deter criminals. Unfortunately, even if the bill does pass into law, it may never eliminate this exploding area of financial crime.
So what if a fraudster claims your tax refund before you do? Eventually, the IRS will write you another check. However, you first have to prove that you were the victim of identity theft, an incredibly labor-intensive and time-consuming process. It could be months before the IRS sends you your money. Avoid the stress and hassle by taking some simple steps to guard your privacy and protect what is rightfully yours:
File your tax return early:
If you are entitled to a refund, claim it as early as possible, effectively beating would-be thieves to the punch.
Monitor your credit:
If a thief has stolen your social security number and date of birth to file a fake return, they may have also gained access to your credit information. Invest in a credit monitoring service to keep a watchful eye on certain financial activity occurring under your name. Such services cannot guarantee that you won't be the victim of identity theft, tax fraud or credit fraud, but they can alert you when certain potentially fraudulent activity appears.
Use a password manager:
Cyber-criminals need very little information to file a fraudulent tax return under your name, so make it as difficult as possible for them to obtain it. Be sure to follow password best practices, like using random combinations of upper and lowercase letters, numbers and symbols and avoiding real words, names and meaningful numbers like your date of birth. Additionally, the password for each of your online accounts — social media, banking and email — should be completely unique. Don't reuse passwords or variations on passwords, or you make hackers' work entirely too easy. To keep track of all of your login information, invest in a password manager like SafeConnex, a digital vault which gives you the convenience of single sign on along with an additional layer of security.