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More companies tapped to prevent tax fraud

During tax season you are likely focused on properly chronicling your income, expenses and applicable exemptions. You are probably not worried about the possibility of your tax information being stolen en route to the IRS.

However, scores of tax returns are hacked each year and the information used to create fraudulent returns (and illegal refunds). According to the Federal Trade Commission, tax fraud was the top form of identity theft last year. Also, the IRS reported that is stopped 1.4 million returns based on identity theft. It also prevented $8.7 billion in fraudulent returns from being paid out. But since identity theft based tax fraud is such a crime with little risk of being caught and a high rate of return taking a chunk out of a $20 billion business is significant.

Because of this, the market for software designed to fight identity theft (especially tax fraud) has ballooned. Essentially, more companies are being tapped to create software to verify companies’ identities and to notify authorities and authorizers if their identity is being used on another tax return.  Even tax filing software makers are incorporating additional levels of security to thwart would-be hackers.

At this time of year, the specter of tax fraud may be lower given that those who commonly wait to file their tax returns are not likely to receive a refund. Nevertheless, it is good to have as many protections as possible to guard your return. If you have the misfortune of being a victim of identity theft, an experienced attorney can advise you. 

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