All you have to do is pick up the phone — or listen to your voicemail — to spot the threat of a crook somehow stealing your identity and filing a tax return in your name.
The fraudsters who claim to be from the Internal Revenue Service never seem to give up on calling the house. So honestly, we cannot help but be aware that identity thieves want to cook up ways to claim a $3,000 or $6,000 tax refund using our Social Security numbers and names.
So why are some people still filing tax returns online via public Wi-Fi systems? Seriously.
Why do we ignore some opportunities, such as possibly requesting something called an “IP-PIN,” which is an option to avoid using your Social Security number?
Why do we even pick up the phone anymore when the fraudsters pretend to be from the IRS?
Tax season crooks are kind of like the pickpockets at the mall who take advantage of the holiday rush to steal your credit card. They’re all out there looking for easy marks.
“ID theft isn’t just credit card fraud,” said Rod Griffin, director of public education for Experian. A new online survey by Experian indicated that nearly 76 percent of consumers are familiar with ID theft and tax fraud — up significantly from the past two years. And 28 percent of those surveyed have been a victim or know a victim of tax fraud.
But one of the more disturbing stats from that Experian survey: Of respondents who prepare their own taxes, roughly 7 percent do so outside of the house using a free Wi-Fi network.
Really? Go to McDonald’s or Starbucks, grab a snack and use the free Wi-Fi to prepare your taxes? Somehow, we’re more worried about shooting a gossipy email over to the wrong friend than some people are about protecting their name, address, name of employer and Social Security number.
Sure, most people know better. The Experian survey noted that of the 56 percent of people who said they prepare their taxes on their own, 76 percent said they did so inside their own home on a secure network, and 14 percent said they did so at work on a secure network.
The IRS phone scam, of course, still continues.
The IRS, state tax authorities and tax preparers are working together in a few new ways this year to prevent fraudulent returns. The goal is to thwart thieves early in the game. Frankly, there are some ways that ID thieves crack the code without our help, so it’s essential that the IRS and tax preparers spot possible patterns early.
The crooks are not just some kids digging through the trash, though we have that criminal element, too. Some sophisticated crime networks know there are big bucks for the taking.
Earlier this month, the IRS reported that it identified and halted an “automatic attack” upon the Electronic Filing PIN application on www.irs.gov.
“Using personal identification stolen elsewhere outside the IRS, identity thieves used malware in an attempt to generate E-file PINs for stolen Social Security numbers,” the IRS said in a statement.
No personal data was compromised. But the IRS said it identified unauthorized attempts involving 464,000 unique Social Security numbers — and of that amount 101,000 of those Social Security numbers were used to successfully access an E-File PIN. The incident involved an “automated bot.”
This year, people who use tax software to prepare their own tax returns will be required to create a more rigorous password with at least eight characters, including lowercase and special characters; answer at least three security questions and offer a way to verify their email address with a personal identification number sent via email or text to the customer.
The IRS and preparers are working together to check for the repetitive use of the same Internet address to rapidly file multiple returns. And they’re going to look at how long it takes to file that tax return.
“Fraudsters involved in tax refund fraud tend to breeze through returns in just a few minutes because they are generally copying and pasting information into the tax forms, or relying on an automated program to do it for them,” according to KrebsOnSecurity.com, a security-oriented website.
Mark Ciaramitaro, vice president of tax products for H&R Block, said tax ID theft is a growing concern and many times isn’t under your control.
“People need to know that this is becoming a mainstream crime,” Ciaramitaro said. He himself was a victim of tax ID theft, he said, likely due to a security breach at a health care related firm.
“One of the best defenses against these criminals is to file before they do,” Ciaramitaro said.
H&R Block has a product it introduced last tax season called Tax Identity Shield, in part because of the growth of fake tax filings. The cost is an add-on for customers. It ranges from an extra $20 to $30, depending on which other services the client has purchased.
Like your taxes, some features of the tax shield involve stuff you can do yourself. But it’s not always easy to understand or work through on your own.
For example, Tax Identity Shield promotes the idea of getting help with additional identity theft protections offered by the IRS, including the Identity Protection PIN. But your ability to get that extra 6-digit PIN will depend on where you live and what kind of ID theft you might have already experienced.
For example, if you filed a tax return last year with an address in Florida, Georgia or the District of Columbia, you could choose to apply with the IRS for an IP PIN. Or you might receive a letter in the mail from the IRS inviting you to ‘opt-in’ to get an IP PIN.
Many people, of course, have never heard of the IP PIN offered by the IRS.
If you actually end up a victim of ID theft, you’re going to hear more about this PIN, too.
The Internal Revenue Service has what’s called an “Identity Protection PIN” that can substitute for your Social Security number. This special PIN is a 6-digit number assigned by the IRS to eligible taxpayers to try stop the misuse of their Social Security number on fake federal income tax returns. The IRS sends new IP PINs each year in late December or early January by regular mail.
This PIN is not the same as the 5-digit PIN that you’d use to electronically file a tax return.
If the IRS assigns you an IP PIN, you must use it to confirm your identity on your current federal tax return and any delinquent tax returns filed during the current calendar year.
To get the IP PIN, you’d fill out an Identity Theft Affidavit Form 14039. You could check Box 2 for potential victims, meaning you can request this PIN even if you did not have a fake tax return filed using your Social Security number or name. Maybe someone opened a credit card using your ID, leading you to think someone had at least four digits of your Social Security number.
The IRS will decide if you qualify for an IP PIN.
“Ultimately, it’s up to the IRS to decide whether they want to issue you an IP PIN,” Ciaramitaro said.
But people should be aware of their potential options and be extra vigilant about their personal information during the tax season.
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Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at [email protected]