Refund Fraud Causes Taxpayers Long Delays

Tax Day is April 15 and some people who already filed have received an unwelcome surprise, identity theft. In a February blog post, we covered the risks involved with tax season. Identity theft has been so much of a threat that the Department of the Treasury conducted an Internal Revenue Service (IRS) audit. The goal of the audit was to review those identity theft cases in which the victims were due a refund and update whether the IRS was making improvements to help those affected.

According to the Treasury Inspector General for Tax Administration (TIGTA), identity theft entails stealing information that can personally identify someone, including:

•   Name
•   Address
•   Phone Number
•   Social Security Number
•   Date of Birth
•   Eye color, height, etc

After stealing the personally identification information, the thieves can then commit refund fraud. Examples of refund fraud, include:

•   Filing a fraudulent return, reporting fake wages or withholdings
•   Obtaining a refund as a result of a fraudulent return
•   A taxpayer attempts to file his or her tax return, but is rejected because of a duplicate filing
•   Or the taxpayer’s refund is held while the IRS determines the true owner of the SSN

It is important to avoid sharing identifying information online, but that is almost impossible in the digital world. It is easy for a hacker who can see a social media account to find a name, birthday, what a person looks like and even someone’s phone number. Most of this information does not even require signing in to access. However, to complete a fraudulent refund a thief needs much more than a name, but if paired with a social security number can cause a lot of harm.

Identity theft and tax fraud continues to be a growing problem, the number of tax payers affected nearly doubled to 2.4 million from 2012-2013. Along with the large amount of victims there are long delays that can cause emotional and financial stress to those affected.

Even though consumers do not have much control over refund fraud, businesses can help protect their customers by implementing Identity Verification Systems.