April 14th, 2014
Jackie here. Have you filed your taxes yet? As tax season comes to a close we wanted to share one last post with some tax identity theft tips. We are all at risk for this ever growing problem; being aware and remaining educated is one of the best ways to protect ourselves from tax ID theft and fraud.
Finding Out You Have a Problem
How do you know if you’ve fallen victim to tax ID theft? Most people discover the problem when they go to file their taxes. You may be unable to file since a return has already been submitted with your name and SSN. Other people receive a notice that they underreported their income after they have filed (this often happens when someone is using your SSN to work illegally).
If you do discover a problem, don’t despair; there are things you can do. In January Jenna shared her story of tax ID theft which can give you a good starting point for resolving your own problem. Here are some other tips to try:
- File a police report- A police report is often the first step resolving ID theft. While your local police probably won’t be able to do much in fixing your problem, the police report is a valuable tool you can use to prove that you are a victim when talking to credit bureaus and other agencies.
- Review your credit- If someone uses your SSN to file taxes, they might use it for other things too. Check your credit reports carefully and look for signs of fraud. You may want to initiate a credit freeze and put fraud alerts on your credit reports as well.
While there is extra attention focused on tax identity theft during tax season, many of the things you should do to protect yourself are ongoing practices that happen all year long. Make sure you regularly check your credit report, and keep an eye on your bank statements for anything suspicious. Remember, even small amounts can idicate trouble. In addition, be cautious when clicking on links and don’t share information that isn’t absolutely necessary.
April 4th, 2014
Jackie here. We’ve talked quite a bit about the potential privacy pitfalls of Big Data, but what about the benefits? With huge catalogs of information about the activities, actions, and whereabouts of each American, data companies have a valuable resource that can be used to fight things like tax ID theft and fraud. This year several states have decided to partner with data collectors to fight fraudulent tax returns before the money is lost forever.
Tax identity theft is a big problem, and one that isn’t likely to go away any time soon. As identity thieves ramp up their efforts, the IRS and state governments have to find new techniques to battle this pervasive issue. Turning to data companies is a unique solution with the potential for very effective results.
Since these programs are state run, the methods of implementation can vary, but all share a common goal: to catch identity thieves before a fraudulent tax return is paid. One state uses a specially created algorithm to screen for potential problem returns. If a suspect tax return is found, a letter is sent to the taxpayer asking them to visit a website to verify their identity. In the first year of use, Georgia paid about $3 million dollars for the service which saved the state $25 million.
Tax ID theft is still a problem, but hopefully ideas like this one will help state and federal governments continue in the fight against tax ID theft. For more information about this program, check out this article from KCEN TV. Learn more about tax ID theft here.
April 1st, 2014
Chris here, AllClear ID Investigator. The IRS recently released its Criminal Investigation Annual Report for fiscal year 2013. The Criminal Investigation team investigates a wide range of potential financial and tax related crimes. According to the Criminal Investigations Report, these types of crimes include money laundering, public corruption, terrorist financing, narcotics trafficking financial crimes, and identity theft.
The report tracks a total of 5,314 cases investigated by the Criminal Investigations team during the year. Of the 5,314 cases, 4,364 were recommended for prosecution. Almost 3,800 individuals were indicted, resulting in 3,311 convictions, a 93% conviction rate. These numbers are up across the board compared to previous years–the fiscal year 2012 saw the Criminal Investigations unit initiate 5,125 cases with 3,701 recommended for prosecution. These cases resulted in 3,390 individuals being indicted and 2,634 convictions. Of all the stats, however, the most important is the conviction rate, according to Richard Weber, Chief of Criminal Investigations: “The conviction rate is especially important because it reflects the quality of our casework, our teamwork with federal law enforcement and the U.S. Attorneys’ Offices, and represents an increase over 2011 and 2012.”
When it comes to identity theft Chief Weber maintains that it is “One of our top priorities.” In 2013 Criminal Investigations initiated 1,492 identity theft related investigations, resulting in 438 convictions. According to Chief Weber, Criminal Investigations, working in conjunction with civil tax partners, were able to catch 1.3 million fraudulent returnsbefore they were processed and prevented $7.1 billion in false refunds.
Identity theft and tax fraud is still a big problem in the U.S., but teams like IRS-Criminal Investigations are providing a much needed step in the right direction. And according to Chief Weber they only plan on getting better at detecting and preventing these criminal activities, “I am extraordinarily optimistic about the future of CI. Nothing great is ever achieved without dedication and enthusiasm, and our employees have plenty of both. We will remain the energetic, dynamic and adaptive organization that is simply the best at following the money. I am grateful for the service and dedication of all CI employees.”
If you want to read the full IRS-Criminal Investigation Report it can be found here.
January 24th, 2014
Jenna here. We’ve talked about proposed changes to the Social Security Administration’s Death Master File before when a new bill was under consideration to limit public access to the information in an effort to combat tax ID theft. A provision in the budget measure passed last month directly addresses this issue, limiting access to the Death Mater File to certified entities, such as life insurers and pension funds who need access to combat fraud and administer benefits properly.
Limiting access to only these entities will hopefully reduce the number of fraudulent tax returns filed annually under identities of deceased individuals. The Congressional Budget Office estimates that this measure will save the U.S. government an estimated $786 million over the next decade. To read about the provision in more detail, visit this Bloomberg article.
January 22nd, 2014
Jackie here. Here on the AllClear ID blog we talk a lot about ID theft including ways to protect your family, trends, scams and identity theft resources. On other sites, though, ID theft isn’t as big of a focus. While you might not be seeing identity theft news on CNN or Yahoo! every day, it’s important to remember the problem still exists. Each year, ID theft generates economic losses similar to those incurred with natural disasters (Hurricane Sandy caused $20 billion in damage; ID theft creates losses of about $20.8 billion annually). While laws are being enacted to better protect us and law enforcement is getting better at catching thieves, identity theft still wreaks havoc on lives every day. If you haven’t been a victim, you probably know someone who is.
We talk a lot about data breaches, a problem that seems to be getting worse. For the last nine years there has been an average of more than one breach each day. Due to this increase in the availability of stolen information, it is estimated that the price of an identity is just $25, less than the cost of a steak dinner.
ID Theft is Changing
While ID theft is still a big problem, it is changing. Once credit card fraud was the big worry, now tax identity theft is rising and medical records are becoming a hot target for thieves. Enforcing the law is getting more difficult too, as thieves use the internet to hide their activities and identities.
The changing landscape of ID theft makes this problem no less disastrous than it once was, but much more complex. Will we someday see the same protections on our medical records as we have on our credit reports?
While identity theft is changing, it is important to realize that it is still a problem. What can we do? Remain vigilant. Check your credit reports and bank statements. If you find an inaccuracy, report it and correct it. Don’t think your children are immune from the problem; they are at risk too. Now is not the time to stop fighting against ID theft—just because it’s not making headlines every day, doesn’t mean the risk is no longer there.
January 17th, 2014
Jackie here. As Tax Identity Theft Awareness week comes to a close, I wanted to share a few of the things I learned this week with you. The FTC and the Identity Theft Resource Center co-hosted a great Twitter chat this week; check out the hashtag #IDTheftChat for more great tips!
Don’t Carry Your Social Security Card
We’ve told you before not to carry your SSN in your wallet, but many people still do. I thought this was a great reminder to check my wallet for things that shouldn’t be in there. Other things you shouldn’t carry include bank PINs, account numbers and passwords. If you’re a business, safe guard your EIN just like you would a SSN.
Shred. Shred, Shred
The three items thieves need to commit tax ID theft are your SSN, your birth date, and your name. If you don’t shred your trash and personal information some of these will surely end up in the trash. Shredders are relatively inexpensive and are a priceless tool in fighting all types of ID theft. If you don’t have a shredder of your own, check with your local Better Business Bureau; they often host shred days with free shredding services.
Watch for Scams
All year round, but especially during tax season, thieves impersonate the IRS to get information. Watch for websites, emails, tweets and phone messages that claim to be from the IRS. If you don’t know whether something is legitimate, double check before you share personal information.
Keep Important Documents
When filing taxes you may need to hang on to some documents for several years. If you’re storing these digitally make sure they are encrypted. If you store hard copies, keep them in a secure place away from prying eyes. This neat chart was shared during the chat to help you know how long to keep each record.
Businesses Fall Victim Too
Consumers aren’t the only ones that are at risk for tax related ID theft. Businesses have risks too. The FTC shared a blog post they’ve created to help businesses understand tax ID theft. If you own a business or help manage one, this post is a must read.
Tax season is upon us so start gathering those records and file early. The sooner you file, the lower your risk for tax ID theft. When you do file use a secure connection if you file online, never public Wi-Fi. If you mail in your taxes, take them to the post office directly.
The FTC’s Twitter chat for Tax Identity Theft Awareness week was a great one. Check it out now!
January 17th, 2014
Robert Siciliano, Identity Theft Expert
Tax relief. Predators scan through tax lien notices to see who’s in deep with the IRS, then offer them tax relief services which are fraudulent. You pay them, and voila, your money not only is gone, but so is the “service.” You’re now further sunk in debt.
- A fee, usually high, is required in advance.
- These scams may be advertised on TV and radio.
- They may also come as an unsolicited snail letter or e-mail, saying that you qualify for some governmental plan.
- The company offering the solution may suddenly disappear.
- If some kind of tax payment plan seems too good to be true, assume that it is.
IRS giving away money. When pigs fly. But really, this scam makes its rounds: flyers and ads claiming free money from Uncle Sam, suggesting you can file a return with minimal or no documentation. These postings often appear in churches. People see them and innocently spread the word.
Abuse of 501(c)(3). Numerous types of nonprofit organizations are exempt from certain kinds of federal income taxes. Some organizations will create schemes to become exempt, including ploys that fraudulently shield income from taxation.
Corporate ownership disguise. A third party is fraudulently used to request EIDs (employer identification numbers). The third parties then form corporations that muddle the business’s true ownership standing.
Trust misuse. Transferring assets into trusts may have some legitimacy, but shady promoters have also encouraged people to do this in an improper way. These transactions don’t live up to their promise of reducing taxable income or maximizing deductions for giving gifts or for personal expenses.
Inflated income & expenses. Though some businesses deflate income to lower what they owe, others will inflate it to optimize refundable credits. They may also claim expenses they never paid.
Hiding income offshore. Some people and businesses, to avoid paying taxes, hide income in offshore accounts. They use credit or debit cards, or wire transfers to gain access to their funds. Other people will use employee-leasing schemes, employ foreign trusts, or use insurance plans or private annuities to get access.
Fake forms. Someone files a false information return, like the Form 1099 Original Issue Discount, to validate a fake refund claim on a corresponding return. Some have made false claims for refunds based on the sham theory that the IRS has secret accounts for U.S. citizens and that one can gain access to these accounts with the 1099 OID form.
Ridiculous attempts at write-offs. Businesses claiming crazy, frivolous claims to avoid paying owed taxes like that business trip to Mardi Gras. The IRS will recognize many frivolous tax arguments and will toss them out of court.
Robert Siciliano is an Identity Theft Expert to AllClear ID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen. See him knock’em dead in this identity theft prevention video. Disclosures
January 16th, 2014
Jenna here. Tax identity theft is a topic that has recently become important to me after falling victim to it last year. You may be wondering how someone with so much knowledge of identity theft fell victim to the crime and the answer is that it can happen to anyone, regardless of their level of knowledge.
How It Happened
With the help of an accountant, I prepared all of the necessary paperwork to file my tax return, and left the office feeling very accomplished—I had knocked a huge item off my to-do list. A day or two later, I received a call from my accountant to tell me that he received word from the IRS that someone had already filed a tax return under my name. Initially, I couldn’t believe this happened to me. I was aware of tax identity theft, but thought I had taken steps to prevent it by safeguarding my personal information, filing early, and using a trusted accountant.
After the initial shock wore off, I began to worry about sorting things out. How was I going to file my return? What if the issue couldn’t be resolved? How did someone get my SSN and other personal information?
Getting Things Resolved
I am happy to report that the resolution process went much smoother than I expected it to. The first thing I did was to call the IRS Identity Protection Specialized Unit at 1-800-908-4490 to see what steps I should take. The steps were surprisingly simple. I went online and downloaded the IRS Identity Theft Affidavit, Form 14039 and filled it out. Next, I made a copy of it and mailed it in to the specified address. Within a week or two, I was notified that my identity had been restored with the IRS, and I was able to file my return successfully.
While I was waiting for the news, I made sure to pull copies of my credit report (full disclaimer, I use our service, so I was able to get assistance from a colleague) to see if there was any suspicious activity—someone did use my SSN to file the return, so I wanted to be sure I was safe. Fortunately, no other activity was detected, and things are back to normal for now. Just to be safe, I did change my bank account passwords and PIN numbers.
What I Learned
This experience taught me that no one is immune to identity theft; even someone who is surrounded by it every day isn’t immune. In addition, I learned that in some cases, identity theft can be resolved successfully by taking the proper steps to detect, report, and resolve the issue. The IRS has great identity protection resources on their website that I found very helpful.
January 15th, 2014
Jenna here. As this is Tax Identity Theft Awareness Week, and as we head into tax season, we think it’s important for you to know how to spot tax-related identity theft.
How to Spot It
Fortunately, tax identity theft isn’t like traditional identity theft in that it is usually discovered fairly quickly. In most cases, consumers don’t have to play detective in order to discover tax ID theft—The IRS will contact you via letter if they notice an instance of more than one person using the same SSN. Please remember that they will not contact you via email, text, or social media and that this sort of communication is likely a scam.
If someone else uses your SSN to get a job and their employer reports their income to the IRS using your SSN, the situation is a bit more complicated. Chances are, when the IRS notices that you filed your own return (which didn’t contain the fraudulent income), they will send you a letter stating that you received wages that you failed to report. If you ever receive one of these letters, do not simply disregard it and think it is a mistake—contact the IRS immediately via a verified number on their website. Be sure you keep record of your communication with them (date, time, name of the person you spoke with) to ensure the issue is resolved.
For more tips, visit this helpful FTC page.
January 14th, 2014
Jenna here. The IRS shed some light on the steps they are taking to crack down on tax identity theft last week and we found some of the information very interesting. Here are some key highlights from 2013:
- The IRS launched 1,492 criminal investigations into identity theft in 2013, up 66% from the number of investigations in 2012
- Prosecutions and indictments more than doubled
- The IRS blocked more than $50 billion in fraudulent tax refunds
- The IRS currently has more than 3,000 agents working to prevent tax identity theft
You can read the full article here.
January 13th, 2014
Jenna here. There were so many good articles to choose from this week, but we’ve managed to narrow it down to our top 3. This week, we have a look at the future of big data in 2014, a really interesting (and long—you may want to save it til after work) read about tax identity theft, and some tips for how to protect your personal information. Enjoy!
2014: The Year Big Data Adoption Goes Mainstream In The Enterprise, Forbes
Beware of Gangsters Filing Tax Returns, Bloomberg Businessweek
How To Keep Your Private Information Safe, USA Today
January 13th, 2014
Jenna here. Each week, we will be posting an intersting video clip. In honor of Tax Identity Theft Awareness Week, we chose a video that offers a sneak peak into just how easy it is to steal a tax refund.
Stealing Your Tax Refund Is Easier Than You Think, USA Today
January 13th, 2014
Jenna here. This is our first post for Tax Identity Theft Awareness Week, so we wanted to start with the basics. Tax identity theft may seem like a simple topic to understand, but there can be a lot of misinformation out there and we don’t want anyone to fall victim simply because they didn’t get the right info. The following information was disseminated by the FTC specifically for this event, so rest assured it is reliable. Be sure to check back each day for a new tax identity theft post.
What Is Tax Identity Theft?
Tax identity theft happens when someone files a phony tax return using your personal information — like your Social Security number — to get a tax refund from the IRS. It also can happen when someone uses your Social Security number to get a job or claims your child as a dependent on a tax return. Tax identity theft is the most common form of identity theft reported to the Federal Trade Commission. The IRS says tax identity theft is a top priority and says it has hired new staff, explored new technologies, and adopted new procedures to fight it.
What You Can Do
- File your tax return early in the tax season, if you can.
- Use a secure internet connection if you file electronically, or mail your tax return directly from the post office.
- Shred copies of your tax return, drafts, or calculation sheets you no longer need.
- Respond to all mail from the IRS as soon as possible.
- Know the IRS won’t contact you by email, text, or social media. If the IRS needs information, it will contact you by mail.
- Don’t give out your Social Security number (SSN) unless necessary.
- Research a tax preparer thoroughly before you hand over personal information.
- If your SSN has been compromised, contact the IRS ID Theft Protection Specialized Unit at 1-800-908-4490.
- Check your credit report at least once a year for free at annualcreditreport.com to make sure no other accounts have been opened in your name.
What To Do If You Do Fall Victim
Tax identity theft victims typically find out about the crime when they get a letter from the IRS saying that more than one tax return was filed in the their name, or IRS records show they received wages from an employer they don’t know. If you get a letter like this, don’t panic. Contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.
More information about tax identity theft is available from the FTC at http://www.ftc.gov/idtheft, the IRS at http://www.irs.gov/identity-theft. We’ve also talked a lot about tax identity theft on our blog. You can find your state/local office contact information here: http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1
January 9th, 2014
Jenna here. We have exciting news! The FTC is hosting their first ever Tax Identity Theft Awareness Week January 13th-17th. That’s next week! To do our part to raise awareness about this growing issue, we will be posting helpful information and links on our blog, Facebook, Twitter, and Google+ pages every day, so be sure to check them out for great information. To make the most out of next week, here are some helpful resources you should take a look at to ensure you don’t miss out on the action:
FTC Press Release about the event:
FTC’s Tax Identity Theft Awareness Week website:
Regional Events for Tax Identity Theft Awareness Week:
Check back next week to learn all about tax identity theft just in time for tax season!
January 8th, 2014
Jackie here. As we roll into the New Year, our thoughts turn to getting things in order for taxes. As tax identity theft is a big problem, it’s important to always turn to trusted sources when looking for tax information. Did you know the IRS has several different resources for you to use? Whether you like Tumblr, YouTube, iTunes, or Twitter, there’s an official IRS resource to help you get through tax season successfully. Which of these resources will you check out? Let us know which is your favorite!
- Official Smartphone App- Interact with the IRS using your Android or IOS smartphone via the IRS2Go V3 app. With the app you can check refund status, get tax receipts, tax tips and advice and stay up to date with the latest IRS news.
- Tumblr- If you’re on Tumblr, be sure to check out the IRS’ official page. The page was new for 2013 and already has received more than 200,000 views. One identity-friendly feature is the scam alerts and warnings posted on the site.
- YouTube- Need help with your taxes? The more than 130 videos on the IRS YouTube channel might help. There’s even a video specifically created to help victims of ID theft.
- Twitter- With five official IRS Twitter accounts, there’s one for every situation. For IRS news and tax related announcements follow @IRSnews or @IRSenEspanol. Tax preparers might also be interested in @IRStaxpros and job seekers can find information at @RecruitmentIRS. The final Twitter page is devoted to the IRS Taxpayer Advocate Service and is found @YourVoiceAtIRS.
- iTunes- Love Podcasts? Check out the IRS collection of helpful audio files. We recommend “Protect Yourself from Identity Theft” and “Are You a Victim of Identity Theft?”
- Facebook- Although not commonly updated, the IRS official Facebook page is available for those that want to interact with the agency; you’ll likely get more information, however, by accessing some of their other informational channels.
As you get ready for tax season, check out these helpful IRS resources; be on the lookout for ID theft warnings and scam alerts from us as well!
January 1st, 2014
Jackie here. As we say goodbye to 2013 and welcome in the new year, it’s always interesting to look back on ID theft trends and make a few predictions for the coming year. Let’s take a quick look at our list of threats and predictions
for last year… did they pan out? Then I’ll give you a few predictions for the ID theft trends that may be coming in the future.
- “Child ID Theft Will Continue to Rise”- Although the numbers aren’t out yet showing the number of child ID theft victims in 2013, a 2012 report found that the problem was certainly prevalent. The study found that 2.5% of U.S. households with children had experienced child identity fraud at some point. Legislators have been passing child ID theft laws as well. This year, several states either passed or are working on laws to allow parents to freeze their children’s credit, requiring foster agencies to help clean up children’s credit reports and creating child ID theft prevention programs.
- “Monetization of Social Networks”- Social networks certainly expanded their money making efforts this last year. Twitter went public with their stock, generating a few IPO related scams along the way. Social media scams are still big business for scammers, so keep an eye open for offers of fake gift cards, airline miles, etc. in the coming year too.
- Tax ID Theft- Tax ID theft continues to be a problem. As the numbers roll in for 2013, we are seeing fairly large increases in the tax ID theft rates across states. In all of 2012 there were 1.2 million taxpayers with tax id theft problems. In just the first 6 months of 2013, there were 1.6 million victims.
Now that we’ve reviewed a few of last year’s predictions, let’s move on to what we see coming as we roll into 2014.
- More Companies Shift to the Cloud- Industry leaders predict that companies will continue to shift their data storage needs to the cloud. What does this mean for you? It means increased risk. When information is stored online it can be accessed from anywhere, both by the companies themselves and by hackers. Sure, it’s convenient, but it also means an increased risk of data breaches and security incidents related to data stored in the cloud.
- Mobile Malware- The days of not having to worry about viruses on your mobile phone are coming to an end. It’s likely that we will see increases in mobile malware, especially on Android phones. If you haven’t secured your phone yet, do so. Thieves always like an easy target. This fact sheet from the Privacy Rights Clearinghouse has some great tips for securing your smartphone.
- Passwords That Aren’t Passwords- People are notorious for creating bad passwords (think “password” or “1234567”). As companies seek to create more secure devices and accounts, this means finding solutions to the password that aren’t as easy to compromise. Biometric technologies are one possible solution. Maybe in 2014 we will see a smartphone that uses a heartbeat for identification or an online bank account that uses fingerprints to log you in.
- Increased Medical ID Theft- As medical records continue to shift online, the odds of a medical record breach continue to increase. Medical professionals have been warned to expect increased data security risks for 2014.
- Increased Mobile Payment Fraud- It is expected that the mobile payment industry will grow by more than 30% a year for the next several years. As this payment method grows, thieves will likely get in on the action too, leading to an increase in mobile payment fraud.
May your 2014 be filled with health and happiness and, of course, be ID theft free.
December 13th, 2013
Jackie here. We talk a lot about tax ID theft during tax time, but it’s important to remember that this isn’t just a problem come April. Tax ID theft is a year round problem and one that’s getting worse each year. Recently the Treasury
Inspector General for Tax Administration (TIGTA) published a statement showing how bad the problem has become. Tax related ID theft is at all-time high this year.
In just the first 6 months of 2013, about 1.6 million Americans fell victim to ID theft/tax refund crimes compared with 1.2 million taxpayers in all of 2012. This is a marked increase of an already large problem. I’m interested to see what the final number for 2013 will be, but all signs indicate that it will be much higher than in 2012.
While the increase in number of victims is concerning, there is some good news in the TIGTA report. Although there were more victims, the total amount lost fell substantially. Since we all bear the burden of stolen taxpayer money, this is great news for taxpayers across the country. In 2011, the government lost $3.6 billion in fraudulent tax returns, down from $5.2 billion the year before. It’s still a lot of money lost to fraud, but decreasing nevertheless.
In the coming years we’ll likely see the IRS institute more fraud protections to keep refunds safe and to minimize the amount lost to this growing crime. One of the biggest things you as a consumer can do is file early… start getting your tax information ready now so you’ll be ready come next year. Our tax ID theft section of our blog linked to at the start of this post has great tips for keeping your information safe as well.
September 18th, 2013
Jackie here. Tax ID theft is a growing problem and this year the IRS stepped up their efforts to combat and catch perpetrators of this crime. Hopefully, the renewed fight against tax ID theft will soon result in fewer victims and fewer hassles come tax time.
What is the IRS Doing?
During the 2012 fiscal year, there were approximately 450,000 tax related ID theft complaints, an increase of 78% from the previous year. This huge jump indicates the growing problem that is tax ID theft, and highlights the difficulty in fighting the problem. There is no simple solution to tax ID theft. You can do your part by filing early and keeping your personal information as secure as possible.
With a problem as pervasive as tax ID theft, sheer manpower is essential in combating it. The IRS has doubled the number of employees working on tax fraud, bringing the total more than 3,000. Additionally, they are opening more cases than in years past.
Budget cuts remain a problem for the IRS, just as with many other government agencies. New budget proposals have potential cuts included in them which could make it difficult to keep up fraud prevention efforts by the IRS.
Tax ID theft is a serious problem, but it’s good to know the IRS is working hard to fight it. Learn more here.
July 30th, 2013
Juan here, AllClear ID Investigator. Gangs and organized crime syndicates are more emboldened than ever to commit ID theft. Like any business, a gang is organized to make money, and id theft is just another way for them to do that. Gangs make money by committing ID theft in a variety of ways, ranging from fraudulent tax filings, stealing Social Security checks and other benefits from the elderly, and of course, by opening lines of credit in your name.
To commit fraud and ID theft, gangs must first get ahold of people’s personal information. Recently, the trend has been to have girlfriends or female gang members get jobs as data entry clerks, administrators, or receptionists. They show up for a couple days of work, copy the information of random people or download it to a flashdrive, then they never show up again. Sometimes, the company may take months to figure out what happened, or they may never know at all.
What About the Victims?
When a victim of ID theft successfully restores their identity, they are cleared of any responsibility to fraudulent charges and debts. Let’s say, for example, that a credit card was opened in your name, $5300 charged, but you were able to prove that you were the victim of fraud and are cleared of all responsibility for repayment. Next, the creditor asuumes reponsibility for the debt, and owes the $5300 charged on the card. At that point, the creditor more than likely has information as to who the suspect is and where they live. It is up to them, however, to decide to contact law enforcement or to pursue the id thief criminally. In many instances, the time and money a creditor must spend to bring charges against the gang or id thief is not worth the amount of money stolen, and creditors simply decide not to press charges or file a criminal complaint.
Even when the crime is a fraudulent tax filing used to commit tax id theft, the chance of being pursued criminally by the IRS for a filing of $500 to $2500 is almost non-existent. “The only thing you can try to do is complete the refund in January, before anyone else can file in your name,” according to Detective Craig Catlin with the North Miami Beach Police Department. Ultimately, many creditors, and even the IRS, often do not have incentives to take any criminal action against id thieves. Gangs are beginning to recognize this, and are using it to their advantage, committing more id theft than ever before.
July 8th, 2013
Jenna here. As promised, here are our favorite articles for this week. Privacy, Facebook Graph Search, and tax id theft risk factors made the cut this week. Enjoy the information!
It seems every time I go out to shop now, retailers ask me to provide them with my zip code when I make a purchase. At first, I thought nothing of it. But after reading this article from Forbes, I discovered that sharing my zip code may actually be the final piece of the puzzle marketers, advertisers, and even id thieves need to know my name, address, phone number, and other personal information. Find out the full story about why you should be more cautious when giving out your zip code here:
Never Give Stores Your ZIP Code. Here’s Why, Forbes
Facebook rolled out its Graph Search feature to all users who view the site in English this morning, making it easier than ever for users to search and be searched for. The new feature combines likes, location data, photo tags, and pages you follow into a giant search engine tool, and allows people to search for information such as “pictures taken in Austin, TX”, and view photos taken by strangers with the location tracking feature on (provided they are made public). Facebook urges users to review their privacy settings as this feature becomes available to more users:
Facebook Graph Search opens up its doors; mobile version coming soon, Washington Post
While the 2013 tax season is over for many of us, if you filed an extension you have a few more months to get your taxes submitted. Even if you have already submitted your taxes this year, these tips will help keep your id (and your tax return) safe from theft in years to come:
10 Ways to Become a Victim of Tax Identity Theft, Forbes
May 15th, 2013
Jackie here. We’ve talked a lot about the IRS and tax related id theft this year, but today we’d like to explore the IRS in a whole new light. According to this article, they have recently unveiled plans to use “Big Data” and online tracking to better discover tax cheats. What implications will this have for your privacy? Will this new program help stop the growing problem of tax id theft?
The Internet- A New Tool for the IRS
Using the internet to track and find tax cheats is a new method for the IRS. In the past, they would occasionally turn to online transactions to prove fraud but they have never before used online tracking to audit consumers. The “robo-audit”, as some have called the auditing style, could change the way the IRS conducts audits and could lead to a great deal of personal information being shared with the agency.
Privacy Concerns with the “Robo-Audit”
There are some very legitimate privacy concerns associated with this new way of conducting an audit. We’ve talked about the dangers of “Big Data” and the IRS’ program has the potential to create many more privacy problems. They will have access to all the information that data marketers do, plus the personal and confidential information that the IRS can access, like social security numbers, financial information, health records, and more.
The IRS has disclosed little about this new program, but what we do know is that information will be gathered using tactics like digital tracking and specialized computer programs will find discrepancies and problems to flag for IRS employees. Things like social media, internet purchasing, online banking, etc. could be used to gather information for these online audits. Much of the work will be automated, and computerized audits will become more prevalent than they have been in years past.
Scanning digital records and tracking internet behavior could potentially help the IRS recover more taxes, while saving time over in-person audits. However, it does have the potential to be a privacy nightmare and to force consumers into sharing more of their private data than ever before.
May 15th, 2013
Juan here, AllClear ID Investigations. A major problem for many consumers over the years has been a lost or stolen W-2 form, as it contains not only personal information such as name and address, but also a complete Social Security number. It seems the IRS has taken notice of this problem, and now has a functional solution.
The idea is to allow certain businesses and organizations to provide individual tax filers with statements showing a “truncated taxpayer identification number” – or TTIN. While traditional W-2 forms will still be used, and will still contain a full SSN, employers will be able to provide statements related to income, annuities, and other financial matters using a TTIN, and not the full SSN.
The proposed changes would only affect filers of certain information returns. The TTIN can be used with 1099, 1098, and 5498 forms. It cannot be used with 1098-C forms.
The truncated taxpayer identification system began to be tested several years ago, due to a growing occurence of tax fraud and tax id theft. In an IRS statement, they recognized that the paper payee statements for individuals pose the greatest risk for potential fraud.
Of course, this sort of program does have its critics, and in this case, those are state tax boards. Their concern centers around whether this truncation of the SSN would affect state income tax returns. The IRS, however, concluded that state tax filings would be unaffected, since those filings are mostly done using W-2 forms, which will not be part of the truncation program.
Overall, the truncated taxpayer identification numbers seem to benefit the IRS, who loses money ever year due to fraudulent filings, as well as consumers, who may have a lower risk associated with filing taxes under the new system.
April 9th, 2013
George here, AllClear ID Investigations. Every year around tax filing time, many consumers become victims of tax fraud. The IRS has no way of preemptively stopping it unless you’re a previous victim; in that case, they issue a 4 digit pin number to file next year’s taxes with. National taxpayer advocate Nina Olson reported this year that identity theft related tax refund fraud has increased 650% since 2008.
LexisNexis, a public records data base and identity management systems company, has expanded a pilot program they tested in Georgia last tax season to help fight tax fraud to four additional states. LexisNexis Tax Refund Investigative Solution program has been expanded to Connecticut, South Carolina, and two other unnamed states.
Before this system was introduced, all US states used rules-based fraud filters to screen for identity theft. This means that if a name and an address had never before been associated on tax returns, the IRS had no way of knowing. However, a search through LexisNexis would immediately raise red flags that this address has never been associated to this person, and would ask additional verification questions based on public records history.
“They have a hard time seeing the full picture of the person,” said Andy Bucholz, director of tax and revenue markets at LexisNexis Risk Solutions. “An identity company like us will have a more complete view of a person.”
About the Program
LexisNexis Tax Refund Investigative Solution uses identity-based filters, which screen tax refund requests against billions of LexisNexis identity records collected from public databases and commercial sources. The LexisNexis system will look for mismatches on names, DOB, social security numbers, addresses, and other data, to ensure that the tax records and person filing them are a legitimate match. If flags are raised, further authentication is required, and the taxpayer is sent a letter stating there was a problem with the refund. The letter would request the taxpayer to visit the state’s IRS website, log in and answer questions based on the public records provided by LexisNexis.
In this age of cyber space, personal information is everywhere. Some of the information is protected by website security, a private company, or state records databases, but some of it is left unguarded. The LexisNexis Tax Refund Investigative Solution is an additional defense against tax id theft the IRS can use to fight this growing problem.
February 7th, 2013
Allison here, with AllClear ID. Now that tax season is open, the deadline for filing is less than three months away, and it’s time to look at some risks associated with the season. Two common recommendations for preventing tax identity theft are to file online, and to file early, which we talked about the other day. However, tax season presents additional risk to your identity, so let’s take a look at a few of them here:
A Sloppy CPA
A CPA is a great resource to minimizing your payment or increasing your return, but if this person doesn’t consider document protection a priority, may want to consider finding another one.
Tip: Ask your CPA what measures he/she is taking to protect your information, and who has access to that information. Let him or her know that this is very important to you, and don’t allow the person to write off your questions or concerns. Also, do your research and choose a reputable CPA.
Unsecure Security and Storage
Since tax forms contain a wealth of personal information, it’s critical that they are taken care of and kept in a safe place. From the moment you receive forms to well after tax season is over, don’t be careless with these documents. Keeping them on your desk or in your mailbox may not seem like a big deal, but it only takes one person a few seconds to take your form and to steal your identity.
Tip: Do not leave these documents laying around in your car, home, or workplace. Keep forms in a locked location. If digital, make sure the files are password protected.
It’s not just unprotected documents and information that can be problematic, but also the increase in scammers hitting emails and phones pretending to be the IRS. They use these avenues to trick consumers into giving them personal information, thinking they are talking to the IRS.
Tip: Ignore any communication from the IRS that is by email, text message, or phone. The IRS only communicates by snail mail, and will not ask you to share personal information via email or text.
Failing to Monitor Your Identity
It’s a brand new year, and we already have a lot to worry about besides filing our tax forms. However, since identity theft skyrockets this time of year, don’t wait to monitor you identity or to check your credit another day.
Tip: Check credit reports before and after the season, not just right when you send your information in. It’s always possible that someone has tried to file under your name already, or will try to after you’ve filed. Be proactive and don’t rely on the IRS to do something about it.
February 4th, 2013
Jackie here. It’s official; the 2012 tax season is here! This year the season opens and returns can be submitted starting Jan 30th for most people (some with special circumstances will still need to wait). The most common, and some of the best advice for this time of year, is to file early, ensuring you are the first (and only) person to file under your name.
Last tax season it is estimated that more than $5.2 billion dollars in fraudulent refunds were processed and paid out by the IRS. While tax id theft can usually be resolved and your missing refund issued, it can take time and result in huge delays while your claim is investigated. Filing early will help lower your risk and save you the hassle of a lengthy investigation and delays in getting your refund.
As you file your taxes keep an eye open for potential signs of id theft like multiple returns filed using your social security number, a balance due or collection actions from the IRS or IRS records that indicate an employer that you haven’t worked for.
If something suspicious does come up or if you believe you’ve been a victim of tax related id theft you should contact the IRS Identity Protection Specialized Unit by calling 1-800-908-4490. You can also access more information about id theft on the IRS website here and here.
Now is a great time to start filing your returns and protecting your tax refund from identity thieves. In the meantime you should also check out past posts about tax id theft on the AllClear ID blog.
December 24th, 2012
Jackie here. 2012 was a year filled with child id theft, fake anti-virus software offers, and social media scams. Do you remember our 2012 id theft trends predictions? Check out this article on the blog if you need a refresher and let’s look at a few of our predictions to see how they panned out:
- · “Your social media identity may be more valuable to cyber criminals than your credit cards.”- This prediction certainly came true with countless scams promising free iPads, gift cards to favorite retailers, etc. just for liking a page. Cyber criminals know that we instinctively trust our friends, so compromising one of their Facebook pages will likely get us to trust a link that we otherwise wouldn’t.
- Search Engine Poisoning- I use search engines every day, but the practice can be risky due to search engine poisoning. Basically, cyber criminals create rogue websites and get them featured in the search engines in the results of a popular search term. When you click on the link, you are taken to a malware infested site and your computer can then be contaminated by malware. Larger search engines like Google tend to have more security precautions in place than smaller search engines. For instance, in 2012, it was discovered that Bing search results are more than twice as likely as Google’s to feature malware links.
- · “Fake technology tools are on the rise.”- Pop ups offering anti-virus protection and the like were also popular scams this year as predicted, but there were some surprising versions of this scam. One in particular was the Citadel Malware extortion scam. This scam installed malware on unsuspecting devices that locked up the computer with a message that federal law had been violated. The user was then instructed to pay a fine. Read more about this 2012 scam on our blog.
We’ve looked over last year’s predictions a bit; now let’s see what might be coming in the new year. Here are some of our id theft trend predictions for 2013:
- Child ID Theft will continue to Rise- The prevalence of id theft in children under five doubled from 2011 to 2012. This number will likely continue to increase as children are easier targets than adults for id theft and have clean, unused social security numbers for thieves to take advantage of. While many parents don’t think to check their child’s credit report or personal information, it is important to do so. Check out these tips on child id theft for some help.
- An Increase in Corporate ID Theft- ID theft was once only a worry for consumers, but it is becoming an increasingly common problem for businesses as well. In the coming year businesses should watch for the signs of corporate id theft and take steps to further protect their customers from breaches.
- Continued Tax ID Theft Problems- More than $5 billion was lost as a result of tax related id theft on 2011 taxes. As we prepare to file our 2012 taxes, you can expect similar problems. The Treasury Inspector General for Tax Administration estimates than $21 billion dollars will be lost due to fraudulent returns over the next five years, even with increased safety precautions and fraud filters. The solution: file early if possible and complete an id theft affidavit form if you suspect your identity has been compromised.
What scams do you think we’ll see more of in 2013? Whatever scams and threats may arise, keep checking our blog and we’ll keep you up to date on the latest threats to your identity.
December 19th, 2012
Allison here with AllClear ID. While tax season is just around the corner, tax fraud is a year-round enterprise. One of the more recent tax fraud stories in the news involves a former resident of St. Louis who is accused of participating in a $1.5 million tax identity theft scam. Allegedly, the woman was taking the information of the recently deceased and using it to obtain their tax refunds. A federal investigation in late November found that 191 fraudulent tax returns were filed from her computer using the stolen identities.IRS,
Upon further investigation, authorities discovered that 27 of those refund checks were sent to three different states (Maryland, Missouri, and Florida), indicating that this woman was possibly the ringleader of a large network of people using these identities. In return for sharing the personal information of the deceased, the alleged ringleader was sharing the proceeds from the returns. During the investigation, a number of items were seized, such as $5,000 in cash, multiple notebooks containing the personal information of others, debit cards, and MoneyGram receipts. The woman admitted that these items were part of an identity theft scheme.
Tax fraud by means of identity theft is a growing problem because of how tax returns for the deceased are handled. In an effort to legitimize the process of claiming returns for a deceased taxpayer, the IRS requires that tax returns for the dead are accompanied by a form that describes the person filing the form. However, now scammers and thieves are often stealing the identity of the person filing the form and filing for tax returns under that name.
The rise in tax fraud involving the deceased serves as a reminder to all of us that we need to be protective of the identities of our deceased loved ones, double checking their reports and perhaps handling their tax returns right away. It’s now more possible than ever that these identities will be used by a thief.
November 27th, 2012
Jackie here.When I was in school I always loved the days that the teacher decided to skip our lessons and show a video instead. So as a special treat for you, I’ve rounded up some of the best id theft videos on YouTube. Sit back, take a break, and enjoy learning more about identity theft.
1. Protect Yourself From Malware by the FTC
We talk a lot about malicious software and how to avoid it here on the blog, but if you’re a visual learner, this video might help reinforce important concepts. This video is very informative and since it’s easy to follow and understand, it might be the perfect way to introduce malware to your children or family members.
2. What to Do After a Data Breach by the Privacy Rights Clearinghouse
After learning I am affected by a breach, its stressful knowing my information has been stolen and I don’t always know the best way to protect myself and my identity. This short video provides step by step tips for protecting yourself after a breach. You’ll learn about credit monitoring, security freezes and the options available. This video is a must watch for anyone that has ever had their information compromised.
3. Keeping Your Kids Safe Online- by Stay Safe Online
Today’s kids are growing up in an entirely different world than we did. They have never known a time without the internet and many spend hours each day online. It is important to start teaching children about online safety and protecting their identities from a young age. This 10 minute video features interviews with parents, teachers and kids about internet safety. If you’ve ever wondered what you need to teach your kids about online safety, this video is for you.
4. Id Theft and Taxes from the IRS
Tax time will be here before we know it. Last year, id theft was a big problem during tax season and we expect that similar problems will arise this year. If you suspect that you’re a victim of id theft or even if you’ve just noticed problems in your credit report, you can work with the IRS to protect your tax refund from thieves. This video explains what you need to do if you are an id theft victim or are at risk for becoming a victim. Act quickly; the sooner you start getting help, the sooner you can resolve your issues.
5. Child Id Theft by AllClear ID
How does child id theft happen? What can you do to protect your child? This video is one we created here at AllClear ID to answer common questions about child id theft. If you have a child, watch this video and find out how to lower their id theft risk.
November 14th, 2012
Jamie here. As the year comes to a close – and after Black Friday, Cyber Monday, the holidays and New Years - our thoughts will start turning to the tax season. If you’ve been reading our blog for a while you know that with tax time comes a heightened identity theft risk. Many schemes are designed to steal identity information, tax refunds and more as we prepare to file to our taxes. We have some great advice about protecting yourself during tax season in our archives and we will certainly keep you updated about the latest schemes and scams in the coming months both here and on our Facebook page, so check back often.
One alert from the IRS that you should be aware of is a recent problem with fraudulent websites that impersonate the actual IRS site. On their website the IRS states, “The IRS warns consumers about a new tax scam that uses a website that mimics the IRS e-Services online registration page. The actual IRS e-Services page offers web-based products for tax preparers, not the general public. The phony web page looks almost identical to the real one. The IRS gets many reports of fake websites like this. Criminals use these sites to lure people into providing personal and financial information that may be used to steal the victim’s money or identity. The address of the official IRS website is www.irs.gov. Don’t be misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov.”
Tips to protect yourself:
- Always connect directly with the IRS through their known web address www.irs.gov.
- Be cautious of any emails you receive that appear to be from the IRS. The IRS will never contact you by email, text message or social media requesting personal information.
- If you do receive a suspicious email or come across a website that appears to be mimicking the IRS site report it to the IRS immediate by email email@example.com.
If we all keep our eyes open for suspicious sites and do our part to report them, we can help to reduce the risk of id theft and keep others safe.
May 25th, 2012
Jackie here, with AllClear ID. We talked a lot about id theft and taxes at the beginning of this year. Tax related identity theft is a growing problem. According to a recent Treasury audit, it affected 641,052 taxpayers in 2011. One of the biggest problems with this type of id theft for law enforcement is being able to easily access the needed records to move forward with an investigation. A new pilot program launched by the IRS may make it easier for law enforcement to find and prosecute perpetrators of tax related id theft.
The IRS pilot program is currently available only to law enforcement officials in the State of Florida. This program will allow local and state law enforcement to have access to fraudulently filed federal tax returns. In order to access the return law enforcement will need to provide a consent form signed by the id theft victim. Upon supplying the signed form, law enforcement officials can request copies of tax returns filed using the id theft victim’s Social Security Number.
ID theft victims will not have access to the fraudulent tax documentation filed using their social security number. The tax return copies are only available to law enforcement. The IRS will continue to work with id theft victims to resolve the issues involving their tax accounts.
The IRS will determine how this program should proceed depending on the results of this initial trial in Florida. If this program works it could make it easier to find and prosecute tax related id theft cases.