PORTLAND -- It’s tax time. W-2’s are going out all over the country and soon Oregonians will be filling out their forms and filing their federal income tax returns.
But what if you file and the IRS contacts you and says your tax return was already filed? It will happen to millions of Americans this year, all thanks to cyber criminals and identity thieves.
Scammers are now going after your tax refunds by filing bogus returns using your personal information.
“Your return's been filed already,” said Michael Davidson, who’s been preparing taxes for 20 years.
Scott Waddell, Chief Technology Officer at iOVATION, has seen the trick too.
“They collect your return refund before you do," Waddell said."You go to file months later, especially if you're slow like me and tend to file extensions and the IRS says 'Hey we've already paid out your refund, no can do.'”
And before you think it’s someone else’s problem consider this: Last year, the IRS caught more than 1.8 million fake tax returns and prevented more than $12 billion in fraudulent refunds.
In their latest audit, the IRS found unscrupulous individuals are stealing identities at an alarming rate in a rush to file fraudulent returns. The audit also says “tax fraud by individuals filing fictitious tax returns is significantly greater than what the IRS detects and prevents.”
Losses this year are expected to exceed $4 billion. And that’s your money.
Taxpayer Mark Fisher says he does everything he can.
“I bought one of those services that protects you against identity theft, and it’s pretty spendy,” said Fisher.
But Fisher said he believes the IRS needs to do more to protect taxpayers.
“There's a lot they can do, a lot more they can do," Davidson said. "You know I work at a bank and we transfer million of dollars around every day and we don't lose any money. We are required to encrypt everything. We are required to protect that identity.”
Davidson said the IRS is an easy target for scammers if the scammers have even some of your personal information.
“I don't like to say it’s that easy, but, it's that easy.” Davidson said. Filing a tax return in someone else’s name is not only easy, it’s a low-risk for scammers. “The IRS has established a shared identity, and that's your social, that's your name, that's your date of birth.”
And it’s all a scammer needs.
Then it becomes a race to see who e-files first. You, or the scammer who steals your identity. Taxpayers KGW spoke with said they all have their own ways to try and protect themselves.
“I file immediately. I have some concerns about e-filing,” and taxpayer told KGW. “No sense worrying about something you can't do anything about.”
According to the IRS website:
A taxpayer who believes they are at risk of identity theft due to lost or stolen personal information should contact the IRS immediately so the agency can take action to secure their tax account. The taxpayer should contact the IRS Identity Protection Specialized Unit at 800-908-4490. The taxpayer will be asked to complete the IRS Identity Theft Affidavit, Form 14039, and follow the instructions on the back of the form based on their situation.
[This story has been altered since its orginal posting on 1/30/14. KGW is investigating ways in which consumers can protect themselves from IRS fraud like this. ED.NOTE 1/31/14]