Expect to see more cases of income tax fraud like those involving Erkes Antwon Green, an Atlanta man charged with bank fraud and being investigated for filing possibly more than 100 returns using others’ names.
Atlanta police arrested him in late February, alleging Green opened a bank account with a stolen check. Further investigation showed Green had files of names and Social Security Numbers and was filing tax returns with that information. He was released on bond, but police said more charges were possible.
Income tax fraud is the fastest growing area of identity theft, doubling each year in recent years, according to the Internal Revenue Service. Making it easier: The proliferation of debit and credit card use, online shopping with personal information being moved around electronically, and consumer data being collected by agencies and companies from which it can be filched.
The IRS inspector general estimated last July that the government could send as much as $21 billion over the next five years to catch and punish fraudsters who have used others’ identities to file for false tax refunds.
It usually starts with a Social Security Number being stolen, said tax expert Jonathan Swartz, an accountant and financial adviser from the Bennett Thrasher accounting firm in Atlanta.
He and his colleagues in the field are seeing more cases pop up when they file a return for a client, only to have the return rejected by the IRS because someone has already filed in that name, he said. It can take IRS computers months to catch up to the false information used to complete the return.
The theft can be as sophisticated as criminal rings who collect and then sell the numbers or as simple as a thief diving into someone’s trash to find financial documents.
Swartz advises to take steps to limit your risks, such as signing up for one of the pay-for-service identity protection firms such as TrustedID, which are also offered by credit bureaus such as Equifax. There are also free things you can do such as putting a Google alert on your name, which will monitor online mentions of it.
He said the first step to protection is shielding your Social Security Number.
“You should be ready to question why anyone would need that,” during any transaction, Swartz said.
Swartz recommends these steps if you find out that someone has already used your identity to file a false tax return in your name:
• Contact the IRS, fill out an IRS form 14039 and return it to the agency. Find the form online here: http://www.irs.gov/pub/irs-pdf/f14039.pdf.
• Contact the credit bureaus Equifax, Experian and TransUnion and alert them that your identity has been stolen and ask that a fraud alert be put on your name.
• Swartz asks the credit bureaus to put a lock on his credit, so no one can open new credit accounts. Unlocking for purchases such as a new home or car loan requires a few easy steps.
• Ask the credit bureaus for copies of your credit history, close any accounts you don’t recognize.
• Call police and file an ID theft report.
• File a complaint with Federal Trade Commission.
• Contact and alert the Georgia Department of Revenue (though most ID thieves file only federal returns.)
Here are more tips for protecting your identity according to Swartz and others:
• Secure smartphones, computers and tablets with passwords, location software and the ability to erase the data if one is lost or stolen.
• Erase data when upgrading or getting rid of old devices. Or remove hard drives from old computers and scratch the drive surface deeply with a hard tool before disposing.
• Put your name on do-not-mail lists by visiting www.consumer.ftc.gov/articles/0262-stopping-unsolicited-mail-phone-calls-and-email. Or pay a service such as TrustedID to clean up your online existence.
• Restrict your info on social media such as Facebook and limit the people who can see it by checking and adjusting your privacy settings at least once a month.
• Don’t give out your ZIP code to retailers at the register. Knowing your ZIP code allows them to easily find your entire address so they can send you unwanted mail, such as credit card applications, which can be stolen.
• Put a Google Alert on your name (go to http://www.google.com/alerts). Search engines will automatically email to you your name if it pops up anywhere on the Internet. If you discover public information that could damage your reputation or puts your privacy at risk, contact the source and ask them to remove the information.
• Create strong, complex passwords that are difficult to hack, even for a professional.