En español | The tip-off can come when you try to e-file your tax return but it won’t go through. Or when an expected refund doesn’t arrive. Or when the IRS sends you a letter saying that multiple returns were submitted in your name.
See also: What's new for taxes in 2013?
Before assuming it’s a technical glitch or red-tape snag, consider a growing possibility: You’ve been hit by tax ID theft.
That’s when a fraudulent return is filed electronically under your identity so crooks can collect your refund. All they need is your name, Social Security number and birth date — and a computer. No W-2s or other tax documents required. They just make all that information up.
Ninety percent of IRS refunds are issued within 21 days of the IRS receiving them, says an IRS spokeswoman. Some go out in as little as 10 days.
But, she adds, it can take several months longer — sometimes not until summertime — for the IRS to receive tax-related paperwork issued by employers and confirm the income numbers with claims made on tax returns.
So by the time the ID theft is discovered, your refund has gone to a scammer. It may be direct-deposited into a bank account temporarily used by the scammer under the false identity, mailed out as a Treasury check (often to a vacant home) or preloaded on a debit card, from which the money can be withdrawn from an ATM.
One consolation: You as the taxpayer aren’t liable for the missing refund — the IRS will eventually send you the money you’re due.
How to protect yourself? Filing early may do the trick — but scammers file early, too. Other than that, you should do all you can to safeguard the personal data that, in the wrong hands, make this crime possible.
The IRS cracks down
The spokeswoman says that the IRS deals with returns from 140 million households a year: “We try to get people’s tax refunds to them as quickly as possible while making sure the integrity of the system is whole and sound.” Combating ID theft crime is a “top priority,” she says.
Crooks may get thousands of dollars per fake return; real taxpayers are left with a hassle-filled ordeal of having to prove their own identity to get the money they’re owed. Or worse — if a taxpayer is receiving disability benefits, the Social Security Administration could take the return as evidence that the person is working, and cut off the benefits.