This past fall I wrote to alert readers of the serious and growing threat of tax refund theft and recommended some preventive steps we should all take. I gave you statistics on the tens of millions of suspicious returns stopped, and tens of billions of dollars in fraudulent refunds protected by the IRS in recent years.
Just in the last week we saw headlines of a somewhat high-profile – or at least pretty unique – story on a tax refund theft ring being busted. Six football players from the University of South Dakota pled guilty to planning to defraud the IRS of roughly $1.1 million, of which they had already nabbed about $400,000. The group was using pre-loaded debit cards from the IRS to repeatedly hit ATMs to withdraw cash. They were only caught when a concerned citizen became suspicious of a young man repeatedly visiting the same ATM throughout the day.
According to the AP report, the ringleader “recruited students, his girlfriend, and others he knew in his hometown of Tampa, Florida, to gather names, addresses, Social Security Numbers, and other identifying information.” The group then simply used another address to get the debit cards sent to them instead of the victims, and they were off and running.
Now that tax season is upon us, I wanted to again emphasize both the scope of the threat and what we should all be doing to combat it.
How to protect yourself from Tax Return theft
Beat them to the punch
The biggest takeaway from this story came when Assistant US Attorney John Haak said, “They had to get these (returns) submitted before the real person could submit it.” By far, the most effective thing you can do is file your return as soon as possible. As you read in this story, thieves’ entire schemes are predicated on fraudulent returns making it to the IRS first. Even if you’ve had information stolen, being the first to file in your name ensures your legitimate return will make it to the IRS first. Better the thief gets the rejection notice than you.
Do not reply
While this case didn’t mention whether this group utilized phishing techniques via email, it’s still the most widely used technique in terms of volume for such scams. Millions of fake emails can be sent in a day by a single computer, trying to extract personal info from unsuspecting and careless victims. Messages will often be disguised to look like an IRS address is the sender, and links often will direct you to malicious sites that look like official IRS sites. Remember: the IRS will never directly email you asking for your personal or financial information. If you receive such a message, don’t reply to it, click any links, or open attachments. Forward the message to firstname.lastname@example.org and delete it.
More information on how to handle phone, mail or fax solicitations (and sample scam attempts) can be found here: www.irs.gov/uac/Report-Phishing.
If in doubt, shred it
Neither dumpsters nor your garbage can are safe. In this story, the ringleader’s girlfriend actually pilfered Social Security Numbers of customers from her workplace. While you may not be able to prevent this kind of behavior, you can stop people from pulling sensitive documents from your trash. Invest in a good shredder or use a reputable document disposal company on any (even remotely) sensitive documents.
Protect your personal information
Carrying sensitive documents (Social Security card, Medicare card, birth certificate) in an unsafe place like a pocket, wallet, or purse is handing a thief the weapon with which they’ll hurt you. Sadly enough, the odds are your information already resides with a number of organizations with which you’ve done business. Don’t compound the problem by putting this info at arm’s length of anyone passing by unless it’s absolutely necessary. Instead, keep these documents in a locked file cabinet or safe in your home whenever you don’t need to have them with you.
Use the post office
Like your garbage can, your mailbox isn’t safe. If you file by mail, drop your return off at the post office personally. The United States Postal Service provides certificates of mailing, USPS tracking, Signature Confirmation™, and Return Receipt as options to ensure the package was successfully delivered. Since tax returns are not sent to physical street addresses, the use of expedited services such as UPS or FedEx is not available.
If you suspect fraud
- Notify federal authorities of the fraud ASAP by contacting the IRS Identity Protection Specialized Unit at 800-908-4490.
- Fill out and submit IRS Identify Theft Affidavit form 14039. Proof of identity will be required.
- Report the incident to the FTC at 877-438-4338, and file a report with your local police.
- Contact the three major credit bureaus’ fraud departments:
- Close any accounts you know or suspect have been compromised.