Rosalind Evans
As the tax season looms, a formidable challenge confronts taxpayers: tax-related identity theft. This growing concern, where criminals steal personal information to file tax returns and snatch refunds illicitly, is causing notable alarm. Eva Velasquez, president and CEO of the Identity Theft Resource Center, starkly notes that tax identity theft “continues to be a huge problem.” The dilemma is not just in the act of theft but in the ensuing bureaucratic tangles it creates, often leading to protracted delays in return processing and refund issuance.
The gravity of the situation is underscored by the IRS’ Identity Theft Victim Assistance program’s statistics: a staggering increase to 294,138 individual cases in fiscal 2023, up from 92,631 in 2019. While the frequency of tax-related identity theft has ebbed since the advent of electronic filing, the resolution process remains painfully slow. According to Velasquez, the challenge lies in the lengthy time it takes to resolve these issues.
The toll on victims is significant. National Taxpayer Advocate Erin Collins highlights an average wait of nearly 19 months for the IRS to process returns and issue refunds for those affected, a situation she deems “unconscionable.” Recognizing these challenges, the IRS outlines several potential tax identity theft indicators on its website, including unexpected correspondence regarding suspicious tax returns and anomalies in e-filing.
Preventive Measures:
Experts like Mark Steber, chief tax information officer at Jackson Hewitt, recommend proactive measures to combat this threat. Filing tax returns early is a crucial step in outpacing identity thieves. Steber emphasizes the risk of delaying filing, giving scammers a window to commit fraud. Additionally, ensuring the completion and accuracy of returns is vital, as missing information could flag your filing and cause further delays.
Year-round vigilance is also essential. The IRS advises safeguarding data with robust passwords, multi-factor authentication, encryption, and regular software updates. Another potent tool is the IRS’s identity protection PIN (IP PIN). This six-digit number, once exclusive to identity theft victims but now available to all, effectively blocks unauthorized use of your Social Security or taxpayer-identification number for filing tax returns. While Steber cautions against last-minute efforts to obtain an IP PIN for the current filing season, he strongly endorses its use as a future safeguard.
While the threat of tax identity theft looms, informed and proactive steps can substantially mitigate risks. Early filing, conscientious data protection, and the strategic use of tools like the IP PIN are critical defences in this ongoing battle. As tax filers navigate the complexities of the season, staying vigilant and informed remains their best shield against the perils of identity theft.
