With tax season upon us, ID theft is on the rise once again. While it's difficult to stop the fraudsters entirely, we can all do our part to fight them off by remaining vigilant and understanding their latest tactics, including unemployment and tax refund fraud
The pandemic was tough on all of us, and many Nevadans have faced unemployment. The scammers have found a way to use that as an opportunity to fill their own pockets.
Even if you didn't file for unemployment benefits last year, it's possible you might receive notices from the state saying you owe thousands of dollars in taxes on unemployment benefits you never received.
This scam most often occurred where technologically outdated unemployment insurance systems were caught unprepared by an avalanche of fraudulent claims. The scammers typically use stolen identity data to claim benefits and then have the funds credited to an online account that they control.
States were required to send out 1099-G forms reporting taxable income by Jan. 31, and under federal law, unemployment benefits are considered taxable income. As such, individuals affected by this scam are being told they owe a great deal more in taxes than they actually do. In a notice posted Jan. 28, the U.S. Internal Revenue Service urged taxpayers who received 1099-G forms for unemployment benefits they never received to contact their appropriate state agency and request a corrected form.
Tax Refund Fraud
Tax refund fraud is another recurring identity theft scam. It involves the use of identity information and often stolen or misdirected W-2 forms to electronically file an unauthorized tax return to claim a refund in your name. Unfortunately, most victims only first learn of the crime after having their returns rejected because scammers beat them to it. Even if you're not required to file a return, you can be a victim of refund fraud, as can those not expecting a refund from the IRS.
The best way you can avoid tax refund fraud is to file your taxes as early possible, which was February 12 this year. You also may want to take advantage of getting a PIN with the IRS, which recently became available to all taxpayers. The IRS has sought to stem the flow of bogus tax refund applications by issuing an IP PIN, which is a six-digit number assigned to taxpayers that helps prevent the use of their Social Security number on a fraudulent income tax return. Each PIN is good only for the tax year for which it is issued.
If you're interested in creating an account, you'll need to supply a great deal of personal data. Before you head to the site to set up your account, we recommend reviewing the information they'll ask for listed here. Once you have an IRS account and log in, you can request an IP PIN by visiting this link and following the prompts. The site will then display a six-digit PIN that you'll need to include on your federal return before it can be accepted. Be sure to print out a copy and save it in a secure place.
And, as always, be on the lookout for these popular scams, and never give out personal information to unknown callers, texts or emails you might receive.