Identity Theft

Treasury Department Issues Warning on Tax Identity Theft

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Identity theft is a significant problem for consumers nationwide throughout the year, but may become even more of a consideration during filing season.

Tax identity theft is on the rise and has been for several years now, and now the federal government is trying to enlist the help of financial institutions in attempting to stamp out the problem before it affects even more Americans, according to a report from the U.S. Department of the Treasury’s Financial Crimes Enforcement Network. There are a number of ways banks and other institutions may be able to spot evidence that someone is committing tax-related identity theft, such as one receiving numerous direct deposit payments for a number of different people, but which are being paid into one account.

Similarly, many institutions may see a significant increase in attempts to open numerous accounts on behalf of people who are not there, but for which the person trying to open the account is listed as having authorization over it, the report said. Often with these instances, the only transactions these accounts see are related to direct deposit of tax return payouts either from the federal government or state entities.

In other cases, as a means of skirting rules related to bank accounts and to take advantage of a new federal tax return payout option, one person may try to open numerous prepaid cards in a number of other people’s names, the report said. Soon after this is done, all the money that was added to the account from the direct deposit is used either with point-of-sale purchases or ATM withdrawals.

There are many other types of signs that tax refund fraud is taking place at a financial institution, but if workers at these businesses suspect something is amiss, they should file a report with the federal government as soon as possible. This will help to flag such incidents and potentially remediate the issues that might arise from this type of fraud in a timely fashion.

Tax identity theft affects millions of people nationwide every year and despite IRS efforts to reduce its impact, criminals have only been more successful in their attempts to rip off both consumers and the federal government in recent years. Those who are victimized by the crime may find that it takes a period of several months or more to put things right.

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