Tax Vice — Are You Vulnerable?

They Have Your Social Security number.

They know where you live. They know your birthday. They file your tax return.

Recently, police raided a house in South Florida and during the raid found a thumb drive and a laptop that contained the names, birthdays, and Social Security numbers of more than 2,000 people in the South Florida area, and it was an organized crime setup.

"That was a good day for the cops, in a bad year for ... the IRS. Organized crime has learned that stealing from the federal government can be easier and more lucrative than dealing drugs."1 

And why is that?
Well, according to Bloomberg, "Although the government can be slow to build roads and fix bridges, it can issue tax returns within days."2 Although this can happen anywhere in the country, for some reason South Florida seems to be the hot spot for this. In that area, a Strike Force's work in 2012, resulted in 79 different indictments totally $40 million. And by October 2013, that figure had risen to 269 indictments to the tune of $449 million.

Watch Out
One of the exit areas of personal information is via health-care providers, whose employees have access to reams of personal data, which are readily available through alternate sites that they deal with. When you sign that form, you are giving the provider permission to share your information with other third parties.

Another area that comes in question is through tax preparation sites such as Turbo Tax, it makes it very easy for crooks to access the IRS. "Last summer, police near Miami responding to reports of a home invasion found more than 500 prepaid TurboTax-issued Visa cards..."3 There are even clubs in the Miami area that list "Thursday TurboTax Specials" to help you get started on your tax returns, you know the rest of the story.

The federal government doesn't have an exact idea how pervasive this scheme is, but guesstimates go up to $4 billion in 2011. In 2017, the potential illegal windfall is expected to go up to $21 billion. (Figures issued through the U.S. Treasury Inspector General for Tax Administration)

Whose Identities Are Being Stolen?

Everyone is susceptible to id fraud, but those most effected by this type have been citizens in U.S. Territories, the deceased, elderly (over 70), students and those incarcerated. How do you get your guard up?  Well, you could pay for services like I do that monitor my financial scenarios.  It costs me $12/month, but I think it is worth it.  

I concurrently, had another more expensive service, which I got for free, because my Blue Cross Blue Shield account had been compromised. Recently, I did a transaction that required a credit check.  My el cheapo account notified me right away —within hours; the really expensive free one never even sent a notice. 

Despite that, if you don't want to pay for the service there are some guidelines that can help you with this. 

• This Consumer Reports article will be helpful to start. 
• Also, this article "10 Places NOT to Use Your Debit Card," is great advice, surprising, too.
• Students should be very careful with their financial identity, and this article can help them keep things in check.

Remember, question giving personal information to anyone.  Most companies nowadays have alternative account numbers and ways to check your credit.  It might take longer to process, but it certainly will be worth it. 

-----------------------------------------------------------------------------------

1 Bloomberg Business Weekly, January 13, 2014, page 54.
2 Ibid.
3 Op. cit., page 55.