Tax-related identity theft practice is still widespread and remains serious enough to earn a spot on the IRS’ annual “Dirty Dozen” list of tax scams.
The Dirty Dozen is compiled each year by the IRS and outlines a variety of common scams taxpayers may encounter any time during the year.
Many of these cons peak during filing season as people prepare their tax returns or hire tax professionals.
Tax-related identity theft occurs when someone uses a stolen Social Security number or Individual Taxpayer Identification Number (ITIN) to file a fraudulent tax return claiming a refund.
The IRS, the states and the tax industry began working together in 2015 as the Security Summit to fight tax-related identity theft. Recent partners at a recent security summit enacted a series of safeguards that are making inroads against identity thieves.
For example, the number of taxpayers reporting themselves as identity theft victims declined by 40 percent in 2017 from 2016. In 2017, the IRS received 242,000 reports from taxpayers compared to 401,000 in 2016. This was the second year in a row this number fell, dropping from 677,000 victim reports in 2015.
Overall, the number of identity theft victims has fallen nearly 65 percent between 2015 and 2017.
“Because of these successes, criminals are devising more creative ways to steal more in-depth personal information to impersonate taxpayers,” the IRS said. “Taxpayers and tax professionals must remain vigilant to the various scams and schemes used for data thefts.”
Business filers should be aware that cybercriminals also file fraudulent Forms 1120 using stolen business identities and they, too, should be alert, the IRS said.