File Fast to Avoid Tax Identity Theft

As we’ve reported before, the level of increased tax refund identity crime is rising. That is when an individual uses your name, Social Security number and birth date to file a fake tax return with

fake earnings and tax-withholding information to gather fraudulent refunds- frequently on a simple to use, pre-paid ATM card, sent to a calculated, false address.

Then, when an individual files their real tax estimate the IRS flags it because one with the same SSN has already been submitted. The agency then processes your return by hand and scrutinizes everything on it, in order to substantiate your identity and establish which return is valid. This results in an indeterminate delay as far as when you’ll receive your tax refund.

The crime is possible partly because the IRS. now processes disbursements as fast as possible, and matches up the essential validating info after the fact. Most companies, for instance, must provide earnings info to their staff on forms W-2 and 1099 by the end of January. But the employer does not need to file the same info with the government until the end of March. So when you file your tax return, the IRS doesn’t necessarily have your earnings info from your employer for comparison.

The office of the national Taxpayer Advocate, which represents the interests of tax filers, has recommended the IRS point out tactics to get rid of the lengthy delay between processing refunds and reconciling eligibility. “This sequence makes little sense,” the advocate’s report for 2009 asserted. “From a taxpayer point of view, the sequence leads to millions of cases where taxpayers accidentally make over claims that the IRS does not identify till months later on causing the taxpayer not only a taxation liability but penalties and interest fees too. From the government’s point of view, this sequence creates possibilities for crime and requires the IRS to dedicate resources to retrieving refunds that shouldn’t have been paid and that it regularly can’t recover.”

The IRS has been holding hearings on the right way to move to “real-time” tax processing so it can reconcile info on tax returns faster.

With tax refund fraud, scammers can both mock paper W-2s or other earnings statements and file the return by mail. Or, more frequently, they just make up the numbers and file electronically, because there is no need to submit tangible W-2s when filing electronically. By filing early, fraudsters exploit the time gap experienced by the IRS.

So where does this leave the taxpayer? One essential part of the crime is that the scammers hurry to file early, so the fraudulent return is the 1st one received by the IRS. That begs to the point of for filing your return earlier, instead of later on if you don’t have a sound excuse to wait. This will reduce the prospects of a successful fake filing.

If you or someone you know is facing other IRS problems, such as an audit or a levy, don’t hesitate to call JG Tax Group today. Our staff has over 120 years of combined IRS experience and can help you secure your finances.