Con Watch: There’s a New Way to Protect Yourself Against Income Tax Identity Theft

More time to file your tax return means more time for crooks to steal your refund check. The IRS has made that a little harder this year, if you’re willing to go to some extra effort.

Income tax forms with the words "Crime Scene" superimposed over them.

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Steve Weisman is a lawyer, college professor, author, and one of the country’s leading experts in cybersecurity, identity theft, and scams. See Steve’s other Con Watch articles.

Income tax identity theft is still a major problem for the IRS and taxpayers, costing us all billions of dollars each year. This type of identity theft happens when thieves file phony income tax returns with counterfeit W-2s using your name and Social Security number. It can take many months to straighten out the matter with the IRS and receive your income tax refund.

Recently, the IRS has delayed the income tax return deadline until May 17, giving taxpayers and preparers more time to complete their 2020 federal income tax returns. The extension is helpful both because of disruptions caused by the pandemic as well as recently enacted changes in the income tax laws, such as the change in the taxation of unemployment benefits. Residents of Texas, Louisiana, and Oklahoma had already had the due date for their federal income tax returns delayed until June 15 due to the recent severe winter storms.

While the extension may be helpful to you, it’s also a boon to identity thieves, as it gives them even more time to file their fake tax return before you file your real one.

The federal government is helping combat this type of fraud through its Identity Protection PIN Op-In Program, which provides individual taxpayers with a six-digit code that is required to be included on the individual’s income tax return. This will protect someone whose Social Security number had been compromised.

In January, the IRS announced an expansion of the program, a significant development that everyone should take advantage of.

The IRS started the Identity Theft Protection PIN program almost ten years ago, but it was only available to people who were already victims of identity theft and to those living in a few states chosen by the IRS to test the program. Now anyone can and should obtain an Identity Theft Protection PIN. The PIN is only valid for a single year and must be applied for each year. In order to obtain an Identity Theft Protection PIN for this year’s income tax return you should go to http://www.IRS.gov/IPPIN and use the Get an IP PIN tool. The process will require you to verify your identity. Victims of income tax identity theft who have filed an identity theft affidavit with the IRS automatically receive an IP PIN by regular mail from the IRS.

In addition to protecting the privacy of your Social Security number, the best thing you can do to protect yourself from becoming a victim of income tax identity theft is to file your return as early as possible. A criminal can successfully make you a victim only if they file your income tax return before you do. We can expect that identity thieves will be very busy this tax season taking advantage of people who put off the filing of their returns.

So, how do these income tax identity thieves get your Social Security number and other personal data in the first place? They will often send emails that appear to come from the IRS or tax preparation company intended to get you to respond quickly to a phony emergency. They’ll ask you to provide personal information such as your Social Security number, or they could direct you to click on links or download attachments that contain malware that will steal your personal information.

Key things to remember:

  1. The IRS will never initiate contact with you by phone, email, or text message, so any such communication you receive is from a scammer.
  2. Never click on links, provide personal information, or download attachments in response to an email or a text message unless you have absolutely confirmed that the communication is legitimate.

Featured image: J.J. Gouin / Shutterstock

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