Outsmart tax thieves this filing season


January 17, 2016 at 12:05a.m.

Tax software makers and service providers are offering new layers of security this tax season, says Consumer Reports. You may find shorter shutdown times after inactivity, for example, and fewer chances to try again after a login error.

Users of TaxSlayer, TurboTax and other services will have the option to use a unique login code along with the usual ID and password. The updates reflect a coordinated effort by the Internal Revenue Service, states and the tax-prep industry to prevent fraud involving pilfered Social Security numbers.

According to Consumer Reports, thieves usually claim tax refunds by filing returns before their victims do. So another way to protect yourself is to file long before the tax deadline, which is Monday, April 18, this year (April 19 in Maine and Massachusetts).

What Victims Can Do

You may not know you’ve been a victim of tax-related ID theft until you get an IRS notice. It may say that you collected wages from an employer you don’t recognize, for example, or that your Social Security number has been used on more than one return.

Report incidents of ID theft to the Federal Trade Commission at ftc.gov. Then set up a fraud alert with one of the three big credit bureaus – Equifax (equifax.com/ creditreportassistance, 888-766-0008); Experian (experian.com/fraudalert, 888-397-3742); or TransUnion (transunion.com/fraud, 800-680-7289). The bureau you choose will share your alert with the other two; all three will give you a free credit report. You can also request that the bureaus issue security freezes to prevent any new credit from being issued without your permission.

At irs.gov, fill out Form 14039, an Identity Theft Affidavit. The IRS will issue you an “identity protection personal identification number” (IP PIN) intended to prevent further fraud. (All residents of the District of Columbia, Florida and Georgia – not just victims – can get IP PINs as part of an IRS pilot program. Find details at irs.gov/getanippin.)

Avoid Other Scams

Fraud involving IRS impersonators spikes during tax season. Consumer Reports suggests keeping the following in mind:

The IRS never asks for personal or financial information via email, text or social media, and it will never contact you by phone to demand payment. Report suspicious email to irs.gov/uac/Report-Phishing.

The agency will never ask for credit-card numbers over the phone, require payment without allowing you to question or appeal it or threaten you with arrest for nonpayment.

Report fraud to the IRS at 800-366-4484 and at treasury.gov/tigta/contact_ report_scam.shtml.

4 More Reasons to File Early

  1. Get your refund sooner. About two-thirds of Americans can expect federal refunds this year. Last year, refunds averaged more than $2,700.

  2. Fund an IRA. If you get money back, consider using it to fund an individual retirement account for 2015 before the April 18 deadline. Or use your refund toward your 2016 IRA; you’ve got through the next tax season to do so.

  3. Get a jump on college aid. You can use information from your tax forms to complete the Free Application for Federal Student Aid, at fafsa.ed.gov. Early applicants get more financial aid, says Mark Kantrowitz, president of MK Consulting in Las Vegas and a financial-aid expert.

  4. Buy yourself some time. If you don’t get money back, but instead owe, knowing the amount before the deadline gives you more time to plan how you’ll pay. You can pay by credit card, but you’ll get hit with a service fee of as much as 2.35 percent of your tax liability.

To learn more, visit ConsumerReports.org.

2016 Consumers Union Inc.