October 21, 2016

How to Prevent Tax Fraud Identity Theft

As if basic identity theft is not bad enough, tax fraud identity theft takes it a step further putting you at the risk of criminal prosecution, fines or even causes you to lose your money. According to the internal revenue service, between 2010 and 2011 they detected a 500 % increase in tax returns that turned out fake. This means that people would have lost a whopping 1.5 billion dollars through the 262,000 fake claimants of tax returns. The magnitude of the problem is therefore quite clear considering that it only makes sense that there were thousands of other cases that went by unnoticed.

So what exactly is tax fraud identity theft?

Also, how can you protect your money and you from the crooks who perpetrate it? In most cases foreign immigrant workers who in most cases are illegal will purchase fake (and illegal) identity and documents from criminals who specialize in this kind of thing. These workers will then seek to register for work under the fake aliases as casual laborers. This enables them to contract and hence pay their taxes in a lump sum when tax time comes as opposed to paying weekly from part of their wages.

When it's time to pay up, the government is left chasing you, the innocent person when the taxes are not paid. The illegal workers can keep doing this as there are a lot of people who won't realize they are being impersonated to the IRS .As if this wasn't bad enough, the workers tend to pass your details around to family and friends who are also looking for seasonal work meaning your tax fraud identity theft problem will leave you responsible for a lot of money in tax debt.

A major problem with this kind of crime is that it is silent. This means you will probably not know about it until it's too late and the perpetrator has escaped or moved on to another identity. Most people only get to know of what has happened when the IRS contacts them asking for the money they owe.

How can you protect yourself from tax fraud identity theft?

You will be glad to know protecting yourself isn't too hard as it's just like avoiding regular identity fraud. The following are some tips you can follow to protect yourself from tax fraudsters:

  • Do not carry any documents with your social security number on them or even your social security card around with you.
  • Do not give your SSN because they asked.  Do this only when necessary.
  • Keep your financial info to yourself.
  • Recheck your credit report yearly.
  • Ensure important documents are well kept in your home.
  • Protect your internet activity by use of anti-spam/ phishing software and antivirus.
  • Update security apps and change online passwords.
  • NEVER give out personal details over the phone, internet or via mail unless you are absolutely sure you know you are dealing with.
  • Do not ignore communications from the IRS.

Finally, do not hesitate to contact the IRS if you suspect you are a victim of tax fraud identity theft. This way the tax officials can prevent potential damages.

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