National Consumers League

Consumer group issues taxpayer warning against ID thieves filing illegitimate returns

February 24, 2015

Contact: Ben Klein, NCL Communications (202) 835-3323, benk@nclnet.org

Washington, DC - With Tax Day quickly approaching, the National Consumers League (NCL), is warning consumers to be on the lookout for tax identity fraud and offering tips on recovering from this scam. According to the Treasury Department, 1.6 million Americans fell victim to tax ID theft in the first half of 2013 alone. The Government Accountability Office estimates that identity thieves stole $5.2 billion in 2013 as a result of this fraud.

“While most Americans dread Tax Day, fraudsters increasingly are cashing in with lucrative tax identity fraud scams,” said John Breyault, NCL vice president of public policy, telecommunications and fraud. “What makes this scam particularly pernicious is the ease with which fraudsters can steal personal information, file a false tax claim, and then turn the fraudulent refund into untraceable cash before the consumer realizes they have been a victim of a scam.”

Consumers receive W-2 forms from their employer by the end of January, but often wait to file their taxes closer to Tax Day on April 15. Since the IRS aims to process refunds quickly, fraudulent claims often go undetected. NCL, the nation’s pioneering consumer advocacy group, has published a new guide at Fraud.org to help consumers identify this scam and give advice about how to avoid becoming a victim.

NCL’s analysis of the top scams reported to the Fraud.org database in 2014 revealed a spike in “Phantom Debt Collector” scams. Cases in which a fraudster impersonates an IRS agent make up a significant portion of these scams. Tax related identity theft scams made up nearly a third of the identity theft complaints to the FTC in 2014.

“There is no foolproof way to avoid becoming a victim of tax identity fraud, but there are steps consumers can take to better protect themselves,” said Sally Greenberg, NCL executive director. “The best thing consumers can do is file their taxes as early as possible to ensure the IRS receives the legitimate tax return before the scammers send in a fraudulent return. Also, consumers need to be increasingly vigilant to protect their personal information. Consumers should frequently change their passwords and refrain from sending sensitive information such as Social Security Numbers or bank account information over email or text message.”

Tips for Consumers

  • File your taxes as early as possible during tax season. Scammers depend on the fact that many taxpayers wait until late in tax-filing season to file. Filing early reduces the risk that a tax ID thief will be able to use your personal information to file fraudulently ahead of you.
  • Check your annual Social Security Administration earnings statement carefully. If there are earnings listed that you don’t recognize, someone else could be using your identity to obtain employment.
  • Review your credit report for any suspicious activity.
  • Never give out personal information, such as your SSN, date of birth, or bank account information in response to unsolicited emails, postal mail, over the phone or via text message, social media or other platform.

For more information about how to spot and avoid this scam, and what to do if you believe you’ve fallen victim, visit www.Fraud.org

NCL thanks Intuit Tax and Financial Center for the unrestricted educational grant that helped make this consumer guide available at Fraud.org.

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About the National Consumers League

The National Consumers League, founded in 1899, is America's pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.