Identity thieves continue to steal tax refunds despite security measures taken by the Internal Revenue Service (IRS) over the past several years. The crime is so prevalent there’s actually a term and acronym for it: “Stolen Identity Refund Fraud (SIRF).“
What Is Stolen Identity Refund Fraud
Stolen Identity Refund Fraud (SIRF) is a type of tax-related identity theft in which criminals use stolen personal information to file false tax returns and claim fraudulent refunds.
Victims of SIRF may not be aware that their identity has been stolen until they attempt to file their own tax return and discover that a return has already been filed using their personal information.
This can result in delayed refunds, financial losses, damage to credit scores, and other negative consequences.
How Does Stolen Identity Refund Fraud Occur
SIRF can occur in various ways, such as through data breaches, phishing scams, or other forms of fraudulent activity.
Criminals typically obtain personal information such as a victim’s Social Security number, name, and date of birth, and use that information to file a false tax return.
They may also create fake W-2 forms or other documents to support the false return. Once the fraudulent return is processed, the criminal receives a refund, often through direct deposit or a prepaid debit card.
Unfortunately, this scam is not going anywhere because it’s so easy for criminals to pull off.
Preventative Measures Taken By the IRS
According to the IRS, the agency has made significant progress in reducing the number of fraudulent tax returns and identity theft refunds in recent years. Some of the measures include:
- Improved fraud detection and prevention systems. The IRS has implemented new technologies and algorithms to detect and prevent fraudulent tax returns before refunds are issued. This includes using data analytics, machine learning, and other advanced techniques to identify suspicious patterns and behavior.
- Expanded identity theft protections. The IRS has expanded its Identity Protection PIN program, which provides taxpayers with a unique six-digit code that must be included on their tax return to help prevent identity theft. The agency has also improved its authentication processes to better verify taxpayer identities and prevent fraudulent activity.
- Increased public awareness and education. The IRS has launched public awareness campaigns to educate taxpayers on how to protect themselves from identity theft and refund fraud. This includes providing guidance on best practices for safeguarding personal information and recognizing common types of scams and fraud.
- Partnership with other agencies and organizations. The IRS has partnered with other government agencies, financial institutions, and consumer protection organizations to share information and coordinate efforts to prevent identity theft and refund fraud.
How to Avoid Being a Victim
Your Social Security number is the key to filing a tax return. There are several steps consumers can take to help prevent becoming a victim of Stolen Identity Refund Fraud (SIRF):
- Protect personal information. Safeguard personal information such as Social Security numbers, birth dates, and financial account information. Use strong passwords and do not share them with others.
- Monitor accounts. Regularly monitor financial accounts, credit reports, and tax records for any suspicious activity. Report any unauthorized charges or withdrawals immediately. A company like Lifelock provides monitoring services for identity, credit, and financial accounts.
- Be cautious of scams. Be aware of phishing scams, which often come in the form of emails or text messages requesting personal information or posing as legitimate organizations. Do not click on links or download attachments from unknown sources.
- File early. File tax returns as early as possible to minimize the risk of someone filing a fraudulent return using your information.
- Use secure internet connections. Use secure internet connections when accessing sensitive financial and personal information online. Avoid using public Wi-Fi for these purposes.
- Be careful with personal information. Do not provide personal information over the phone, through email, or on websites unless you are certain of the legitimacy of the request.
- Consider additional protections. Consider placing a fraud alert or credit freeze on your credit report to prevent unauthorized access to your credit information.
By taking these steps, you can help reduce risk but not fully eliminate it. It’s important to stay vigilant and report any suspicious activity immediately to protect against financial losses and damage to credit scores.
And remember, the IRS will never send an email, text or phone call to get in touch. The IRS reaches out to taxpayers through regular mail
How To Deal With Tax Identity Fraud
Should you suspect that you have been a victim of Stolen Identity Tax Refund Fraud, the IRS is available to assist you:
- Complete the Identity Theft Affidavit form, IRS Form 14039. Once completed, attach the form to your paper tax return and follow the mailing instructions on the form to send it to the IRS.
- Request a copy of the fraudulent tax return from the IRS, and further information regarding this process can be found on the IRS website page dealing with fraudulent returns.
- Report identity theft to the Federal Trade Commission, and contact the three major credit bureaus, Experian, Equifax, and TransUnion, to place a fraud alert and freeze your credit reports to prevent thieves from opening accounts in your name.