February 22, 2021 | Family Life

File Your Taxes Early—and Other Tips for Fighting Tax ID Fraud

Some proactive steps could help you protect yourself from becoming the next tax ID fraud victim this year.

With the 2021 tax filing season officially underway as of February 12, it’s a great reminder to file your taxes as soon as possible before the April 15 deadline to avoid potentially becoming a victim of fraud.

Specifically, tax ID fraud, which remains an ever-present and widely concerning issue in the U.S. Late last year, the IRS announced it discovered $2.3 billion in such scams for fiscal year 2020 alone. And, with the rise of other types of fraud, such as COVID-19-related scams, 2021 could be an even more opportune time for criminals looking to capitalize on both business and consumer taxpayers.

 

Here’s Why You Should File Your Taxes Early

To help speed up refund payments during the COVID-19 pandemic, the IRS urges taxpayers to have all of their documents ready to file electronically and with direct deposit set up ahead of time—and for good reason:

Fraudsters can use basic personal information (often found online), your Social Security Number (SSN), and other stolen information (e.g., W-2 tax forms) to file your taxes and route your refunds to their own bank account. Often, victims of such scams find out only after their taxes have been filed either by themselves or a hired preparer, only to receive a letter of rejection from the IRS due to multiple filings. 

And, if there’s a tax return to be filed, whether it’s for a business or an individual, it could lead to tax ID fraud.

 

Tips to Avoid Tax ID Fraud

Here are some ways you can help protect yourself from tax ID fraud for this and future tax seasons:

  • File your taxes as soon as you possibly can. This is the most prominent recommendation by the IRS, and it can be critical to securing your tax filings—and identity. If you beat fraudsters to filing your own taxes, they likely won’t control where your refund goes.
  • Keep your SSN private. There are countless scams designed to steal SSNs (and other sensitive personal information), which in turn can help fraudsters file illegal tax returns. Don’t provide such information to unfamiliar contacts—especially if you’re unexpectedly asked to do so by a stranger via email, text message, or even on social media (because the IRS doesn’t use those methods to contact individuals).
  • Research potential tax preparers before providing them with sensitive personal information. If you elect to have somebody else do your taxes, be sure they’re a qualified, trusted, and reputable preparer. Use the IRS’s searchable directory to help you find a qualified tax professional if necessary.
  • Use secure, trusted devices when filing your taxes online. When collecting your tax documents and then filing online, be sure you’re using as secure a computer as possible that’s running the most updated versions of security software, Internet browsers, and operating systems—and that’s connected to a trusted, safe Internet connection. (For example, if possible, consider using a personal laptop connected to your home Wi-Fi network rather than a shared computer with a public Internet connection.)
  • Consider placing a security freeze on your credit reports. Freezing your credit reports with the top three credit bureaus (Equifax, Experian, and TransUnion) could help prevent further damages if a fraudster does steal your identity.
  • Request an Identity Theft (IP) PIN. Such codes are typically assigned to victims of identity theft to help them confirm their identity with the IRS and other federal agencies moving forward. However, eligible parties may request one for added security.

Consider creating a checklist at the start of each new year to track what you need to collect and then do in order to file your taxes as early as possible. It may also be worth keeping an extra close eye on both your bank account(s) and your credit reports during tax season for unexpected or unusual activity that could be linked to fraud.

 

What to Do if You Discover You’re a Victim of Tax ID Fraud

If you make the unfortunate discovery that somebody stole your identity to file your taxes, consider performing the following actions as soon as possible:

  • Contact the IRS and complete form 14039 (Identity Theft Affidavit) or call (800) 908-4490 for specialized assistance.
  • Follow the instructions that you receive in any letter from the IRS alerting you of a potential stolen tax identity theft situation. Then, report the situation to both the IRS and the Federal Trade Commission (FTC) at gov to initiate a recovery plan.
  • Secure your IP PIN and any other details you receive from the IRS and other federal agencies/law enforcement to prevent future identity theft.
  • Place a fraud alert on your credit reports—and consider freezing them altogether if you haven’t already done so.

 

Additional Resources

For more information about preventing tax fraud, visit these additional FTC and IRS resources. If you’re an Umpqua Bank customer and think you’re being subjected to potentially fraudulent activity involving your bank account(s), report it as soon as possible by contacting our Customer Resource Center or using your Go-To app.