With tax season in full swing, identity thieves are gearing up for a busy few weeks.
Identity thieves use the personal information of American taxpayers to file phony returns, then pocket the refunds—a crime that has become increasingly common in the past few years. In fact, in 2013 identity thieves scored more than $5 billion in ill-gotten refunds, according to the federal government.
But what exactly is tax-based identity fraud and what should you do if you become a victim? Read on to find out.
How exactly does tax identity fraud work?
It’s relatively simple, says Tiara Epps, a resolution specialist from Europ Assistance USA, which partners with GEICO to offer Identity Protection. Criminals steal your personal information and use it to file a fake tax return, usually online. They then ask the government to wire the refund to a pre-paid debit card, which they quickly cash out. The cards are almost impossible to trace.
What information do fraudsters need to file a phony tax return?
Surprisingly little. Criminals can file a return with just your name, address, date of birth and Social Security number, says Epps.
What happens if a criminal files a return before you do?
It will delay your refund, sometimes for months, says Epps. Victims will have to file a new return on paper and submit a sworn statement to the IRS, which will investigate the case. That process can take six months or longer, she says.
How will I know if I’m a victim of tax return fraud?
According to Epps, most people don’t find out until after they have filed their tax return. In most cases, federal or state officials will send you a letter saying they already have a tax return with your name on it.
How can I avoid falling victim to tax return fraud?
Beat scammers to the punch by filing your taxes early, says Epps. Guard your Social Security number like it’s a state secret and, if you’re filing online, make sure your passwords are strong and unique. Also, consider enrolling in GEICO’s Portfolio Identity Protection, provided by Europ Assistance USA.
How can Identity Protection help keep me from falling victim to tax fraud?
GEICO’s Portfolio Identity Protection plan monitors millions of data points and all three major credit bureaus for suspicious usage of your identity information, something that can be a precursor to tax fraud. If your personal information is at risk, you will receive an alert so that you can take action to prevent further damage.
What happens if someone does file a tax return in my name?
The experts at Europ Assistance USA, who are available 24 hours a day, will walk you through the complicated process of restoring your good name, says Michele Krisanda, a senior product manager. They will help you contact the credit bureaus and freeze your accounts to reduce further opportunities for fraud. A dedicated case manager will also help you get in touch with the IRS or your state-level tax officials and tell you what to expect next, Krisanda adds.
Is Identity Protection expensive?
No. When you purchase through the GEICO Insurance Agency, Identity Protection starts at just $79 a year for individuals and $99 annually for families.
Did you know there was a new identity fraud victim every two seconds in 2013?* Give yourself peace of mind by investing in GEICO Portfolio Identity Protection.