Welcome to July!

Still waiting for your tax return?

You may be waiting a long time….If someone fraudulently filed a tax return using your name and social security number before you filed your own taxes. It’s a growing trend in the world of Identity Theft.

It’s as easy as creating a counterfeit W-2 and ID card or driver’s license and presenting them to H&R Block or a similar tax preparation service. The counterfeit W-2 contains your name and social security number, which the suspect could have obtained just about anywhere these days, an address that doesn’t belong to you… or the suspect, and an employer that may or may not exist.

Many tax preparation services now provide you the option of having immediate access to your return. For a convenience fee, the refund is put on a pre-paid VISA or MasterCard, rather than having the refund sent to your home. As soon as the tax preparer unknowingly completes the fraudulent return, the suspect is provided with a Visa or MasterCard with the amount of the return, less a fee, which the suspect doesn’t miss anyway because the money doesn’t belong to them to begin with.

The suspect immediately uses the card for purchases or cash advances before the fictitious return is discovered. Neither you nor the tax preparer becomes aware of the fraud until you try to file your own taxes, only to be told that you have already received your refund and the IRS and Franchise Tax Board (FTB) will not provide you your refund until you prove it wasn’t you.

The likelihood of being able to identify the suspect is slim to none. Although the tax preparer typically asks to see some form of identification, they are not armed with databases that allow them to verify the authenticity of the document. Even if they make a copy of the ID for the file, there is no America’s Most Wanted for identity theft suspects, so the photo doesn’t provide much of an investigative lead.

So what can you do to protect yourself? Even if you have a security freeze with the three credit reporting bureaus, password protect all of your existing accounts, and have credit monitoring, these traditional methods of protecting yourself from identity theft don’t work in this situation. The good news in the midst of this bad situation is, you have options:

• If you have prepared your taxes on your own, contact the IRS immediately. Available on http://irs.gov are plenty of resources, contact e-mails, and emergency numbers to contact. Have your paperwork in order and reach out to them.
• If you used a service like H & R Block or some other tax preparing service, contact them immediately. This is part of their service to you. Take advantage of their services and have them assist you in finding out what went wrong.
• If you used a software package like TurboTax, use their tracking software to find out the progress of your refund. If the refund has process, contact TurboTax immediately for assistance. They may instruct you to contact the IRS, but go through proper channels first. Some software vendors may have staff on hand to assist you.
• Finally, prepare for 2011 now. The best way to prevent this worst-case scenario from happening to you is to beat the bad guys to the punch. FILE EARLY! FILE FIRST!

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