According to the U.S. Internal Revenue Service’s (IRS) statistics, tax fraud is on a steep upward trend―and right now is the prime time for it. Here’s how it works…
Wait! I Didn’t Get My Tax Return?
- Fraudsters steal personal information using different methods, and then file fraudulent tax returns as early as they can―before the victim files.
- Victims file their real tax return and receive a letter in the mail from the IRS saying that they’ve already filed a return. Meanwhile the fraudster has had the cash from their fraudulent tax return in hand for months, and then things in the victim’s life get complicated…
- They have to prove they didn’t file already, investigate how else their identity might have been used for fraud, and on top of that, they still have to file their taxes!
And what comes after this can be even worse…
I’ve witnessed firsthand the impact these types of criminal acts have on people from my years in law enforcement. As part of my last job as a federal police detective, I investigated healthcare and fraud crimes for the U.S. Department of Veterans Affairs. Stolen identities of veterans were used to perpetrate crimes and defraud the veteran, their family, and even small companies. I worked with hundreds of people whose lives were disrupted, financially impacted, and in some cases deprived of necessary services because their identity had been stolen. It was devastating, to say the least.
What You Can Do
Here are some things you can do to help prevent tax fraud:
- Your best defense is to file your taxes early to prevent a fraudster from doing it before you.
- Be aware of―and don’t fall for―scams like phone calls or phishing emails about your refund, a problem with your filing, or requests for more information. This IRS video does a good job of summing it up.
- Be cautious if you’re using a third party, online program or tax software to file your taxes. Do your homework, choose a reputable company and be sure they use secure methods before you trust your information to them.
- Thoroughly investigate all requests for W-2s or personal information.
- Check out the IRS’s advice on preventing identity theft and some of their current tax fraud alerts.
What’s Being Done?
The IRS acknowledges this is a big problem, and they’re working to help prevent fraudsters from committing this type of crime. One way ADP is helping the cause is by partnering with the IRS to test out a new W-2 form that includes a verification code in order to file taxes. It’s been rolled out to select ADP payroll clients and has been a success. Read more about it.
Staying secure requires effort and vigilance, but the alternative is being a victim. To learn more about how ADP protects data, visit the ADP Trust Center at www.adp.com/trust.