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Beating Tax Refund Fraud Happens Early

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One of the fastest growing forms of identity theft-related crime is tax refund fraud, which occurs when a thief files a false tax return using your personally identifiable information. This crime, which some experts estimate costs the IRS over $4 billion a year in faulty refunds, often goes undiscovered until the victim attempts to file his or her legitimate tax return and has it flagged as a duplicate.

Unfortunately, once someone has discovered that they are a victim of tax identity theft, they will struggle with the issue for many years to come. So just how does someone who has been victimized prepare for tax time? While the old “ounce of prevention” saying applies in so many different situations, this is truly one of those events that offer the victim almost no recourse other than keeping a thief from filing in the first place.

The most important thing you can do is to file your tax return early, literally in order to beat a thief to it. If anyone is going to find out that a return has already been filed in your name, you really want it to be the thief, not you. If you prepare your documentation in December, you’ll be ready to file after January 1st, the moment all of the paperwork is in order. There’s no reason to wait until April 15th, especially not when your tax refund is at stake. You will want to make sure that your employer is aware of your situation so that they can get your tax documents to you as soon as possible to enable early filing.

One of the tools that tax identity theft victims often overlook is using the resources of the IRS itself. While many victims are understandably disgruntled with the tax giant, you can be assured that the IRS dislikes identity theft as much as you do. Fighting identity theft has been an ongoing battle, and they are working to provide help to victims. Tax identity theft victims should contact the IRS Identity Protection Specialized Unit (IPSU) at 1-800-908-4490 as soon as they are aware of any problems or if they have questions or issues related to their filing. If you have contacted the IPSU and have not had a resolution to your case, you should contact the Taxpayer Advocate Service toll-free at 877-777-4778.

An important step to minimize the time spent on your identity theft case is being well organized. You should have filed a police report when you first found out you were a victim of identity theft. Keep a copy of this police report in a central, protected location. Along with this document, you should have a copy of any communication you have had with the IRS, including your IRS Fraud Affidavit. Just as you keep records of past tax returns, receipts and other documentation you need to file, hold on and protect these items.

Victims of tax identity theft must also remember that if your return was filed by a thief, that thief has your information and could easily have used it for other purposes. As soon as you learn of the false return, you should take steps to ascertain whether other aspects of your identity have been compromised. These steps include ordering a copy of their credit reports, closely reviewing financial statements, and even health insurance benefit statements.

If you are currently in the process of resolving tax-related identity theft, keep these resources in mind. As you look to the next tax season, try to start planning early to be sure you are able to file as early as possible. December is only six months away, so the time to prepare will be here before you know it.

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