PROVIDENCE R.I. (WPRI) — The Better Business Bureau (BBB) is warning people of a tax identity theft scheme and providing tips to prevent Rhode Islanders from falling victim.
Paula Fleming, the BBB’s local chief marketing and sales officer, said although there haven’t been any reports in our area this year, it has happened in the past.
Fleming said a tax identity theft scheme is when “somebody has filed your taxes before you had gotten the chance and actually refunded and received the money.”
Data from the Federal Trade Commissions’ (FTC) Consumer Sentinel Network Data Book 2019 shows tax identity fraud dropped by 29% from 2018 to 2019, with Rhode Island reporting 1,146 cases of identity theft.
“Scammers got a hold of your personal information, typically the account holder’s Social Security number, address and birth date,” Fleming explained.
This can happen in several different ways, according to Fleming.
“A corrupt tax preparation service could be the cause of it, or the information was exposed in a hack or a data breach,” she said.
Schemers also use ‘phishing’ tactics to steal financial and personal data. Fleming warned to be careful of who you share information with and advised doing some research before enlisting the help of a tax preparer.
“If you’re providing all of your financial records and information, you want to be sure that that person is trustworthy,” Fleming added.
If you’ve become a victim of tax identity theft, you’ll typically receive a notice in the mail explaining that a tax return has already been filed using your Social Security number, Fleming explained.
“If a notice from the IRS notice arrives in the mail about a duplicate return, please respond promptly,” she said.
Fleming said crooks will also target others.
“Tax scammers file in the name of a deceased person as well, and also can steal children’s identities to claim them as dependents,” she said.
The BBB has provided the following tips to help prevent falling victim to tax identity theft:
- File early. The best way to avoid tax identity theft is to file your taxes as early as possible, before a scammer has the chance to use your information.
- Watch out for red flags. If a written notice from the IRS arrives in the mail about a duplicate return, respond promptly. If an IRS notice arrives stating you received wages from somewhere you never worked, or receive other notices that don’t actually apply to you, contact the IRS office immediately. Another big red flag is if you receive a notice that “additional taxes are owed, the refund will be offset or a collection actions are being taken against you for a year you did not file a tax return” (IRS). Contact the IRS if you have any suspicions that your identity has been stolen.
- Protect your Social Security number. Don’t give out your SSN unless there’s a good reason, and you’re sure who you’re giving it to.
- Research your tax preparer. Make sure your tax preparer is trustworthy before handing over your personal information.
- If you are a victim of ID theft, consider getting an Identity Protection PIN (IP PIN). This is a six-digit number, which, in addition to your Social Security number, confirms your identity. Once you apply, you must provide the IP Pin each year when you file your federal tax returns.
For more information, visit IRS.gov.