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Tax Fraud Safeguards

Posted Feb 05, 2016

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Despite efforts put in place by the Internal Revenue Service and by the individual states, tax fraud continues to exist and to evolve.  In 2013 alone, the IRS paid out $5.8 billion in fraudulent refunds to identity thieves.  In response to the changing threats of tax fraud the IRS, in cooperation with the individual states and the tax industry as a whole, has taken new steps in 2016 to create a more secure filing season.

Many of these safeguards will go unseen by taxpayers and involve better interagency communication methods, metafile filters, and software tax preparation providers sending any possibly fraudulent activity to the IRS.  More visible safeguards apply to the self-preparation of returns using tax software.  New password standards, additional security questions, a timed lockout feature, a three refund maximum per bank account, and out-of-band verification for email addresses by sending a text or an email to the taxpayer with a PIN are all measures being taken.

Despite these safeguards identity thieves will still find ways to steal your personal information.  You can take steps in order to minimize your risk.

  • Shred your documents and destroy old computer hard drives, old cell phones, and other devices no longer in use that hold personal and financial data. 60% of identity theft is caused by dumpster diving.
  • Use multiple secure passwords. 25% of identity theft is caused by online scams, hacking or data breaches.
  • Keep your wallet and purse contents to a minimum. 15% of identity theft is caused by direct theft.
  • Avoid email scams. 1.7% of phishing emails get responses.
  • Lock your cell phone and keep personal information stored on your phone to a minimum.
  • Beware who you trust. 30% of identity theft is perpetrated by relatives.

If you have been the victim of identity theft/tax fraud, take the following steps:

  • File a report with law enforcement.
  • File a complaint at
  • Alert one of the major credit bureaus of ‘Fraud Alert’ (other bureaus will be notified).
  • Submit completed Form 14039 to the IRS.
  • Review your Social Security earnings statement closely for several years (

Use this information to your advantage, share it with others, and stay vigilant this tax season and every tax season.

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