Firewall Chats, S. 2, Ep. 4: Death, Fraud and Taxes
Few things are guaranteed in this life—but death and taxes are two you can expect to face.
However, most Americans are not braced to handle tax-refund fraud. This popular form of identity theft occurs when a thief or cyber criminal files a fraudulent tax return and claims the refund before the victim is aware. The International Revenue Service ranks tax refund fraud as its number one scam, and expects fraud to hit $21 billion this year.
In our most recent episode of Firewall Chats, we saw down with Neal O’Farrell, founder of and cybersecurity specialist at the Identity Theft Council, to find out what consumers need to know about tax fraud and how to protect their money.
The “golden rule” for tax fraud is to beat the thief.
“It’s a race between you and an identity thief,” O’Farrell said. “[Your chances lower] if you file as early as possible – which really means you should have filed already.”
Filing early is perhaps the most important and effective tip to avoid tax fraud. The earlier you file your taxes, the earlier the IRS processes them and the smaller the window that leaves for identity thieves to file using your information. Once you file your return, an identity thief won’t be able to collect on your Social Security number. However, if a malicious cyber criminal beats you to the punch, it can take a victim six months to a year to receive your tax refund, said O’Ferrall.
But how does a cyber criminal have your information to abuse? O’Farrell says data breaches are at the heart of tax fraud.
“As a consumer there is very little you can do about preventing a data breach,” he said. “The information is out of your hands. It’s in someone else’s hands. The only thing you can do in that case is just restrict the amount of information you share with organizations. If you don’t need that service, if you don’t need that freebie, don’t give away your personal information.”
If you are a victim, the most important thing to do is stay calm.
“Don’t panic,” O’Farrell said. “Victims of any type of identity theft, particularly anything to do with the government agency and especially the IRS, they panic. They think it’s going to mess up their taxes, it’s going to mess up their returns, or it will get them in trouble.”
Victims often stress that they will need to prove that they didn’t file the return.
“That’s simply not that case,” he said. “Most of the laws are on the side of the consumer. You’re not going to be held liable if it wasn’t you, and you’re not going to have to prove that it wasn’t you.”
If you are a victim, first contact the IRS.
- The agency has detailed instructions on its site on how to begin filing a claim, which can be a lengthy process.
- Next, check your credit report. A criminal must have your Social Security number to file a fraudulent return, so chances are high they are also taking out additional lines of credit.
- Also, consider placing a fraud alert or freeze on your account until everything is resolved.
Listen to the entire episode here: www.CSID.com/FirewallChats. And let us know your feedback on our Firewall Chats Twitter and Facebook.
Save the Date: Our next episode will air on Tuesday, April 11, and will feature Michael Kaiser, executive director of National Cyber Security Alliance.