Different Types of Identity Theft and Fraud


are many different types of identity theft and each year, billions of dollars are lost to this type of crime. Often, when people consider identity theft, they think of things like stealing credit cards and taking out loans in other peoples names. Rarely do they consider tax fraud, but this is a very common type of identity theft.

Tax Preparation Fraud

In most cases of identity theft, the main goal is to get the victims personal information, such as their social security number, and tax preparation fraud is no exception.

Every year towards tax time, it is common for people and businesses to set up temporary shops to prepare taxes for people. Since it is a temporary shop, sometimes only a meeting room in a hotel, the security of the information is no guaranteed. Criminals know this and will stake out these offices, looking for an area of poor security or even stealing customer information, while the preparer is distracted.

Usually, it is not necessarily the person preparing the taxes you need to worry about, but instead the criminals who take advantage of the busy confused pace that is found in these types of businesses. However, you should also be wary of those offering the service without a shop or out of their home, as the business could be set up with the sole intention of stealing social security numbers.

There are also a number of criminals who get hired on at places like H&R block, using false information, and then proceed to steal social security numbers. They may even be using their real name and be in a position to steal information from the company, as was the case of an instance in New York, where the office manager of H&R block was stealing information.

Filing Multiple Tax Returns

One of the most common ways of committing tax fraud, although how effective it is is arguable, is to submit multiple tax returns. The criminal will use an identity that they have stolen and then submit a number of tax returns. Often, this will result in the IRS sending out a check for each return, only to catch the error later on.

Fear of Taxes

Many criminals also take advantage of most peoples fear that the IRS will take all their money. They play off this fear and send out letters stating that the victim needs to fax over their information to avoid having their savings fund taxed. Usually they will ask for information like, mothers maiden name, social security number, account numbers, and pin numbers.

Since so many people are scared of the IRS, and perhaps rightly so, this ends up being a very effective scam. The criminals will even send very realist tax forms to the victim, with all the information on the form being correct, with the exception of the fax number.

Tax Scams on Legal Aliens

There are almost 3 million legal non-resident aliens living in the United States and often, identity thieves will target them, because the aliens are not only not very knowledgeable about how taxes work, but are also often very fearful of the IRS and loosing their Green Card Status. The criminals again exploit these fears and make contact with the aliens, posing as IRS Agents.

Usually, the criminal will tell the alien that they are at risk of being taxed at the highest rate, unless they provide additional information to the agent. They will create a fake, but realistic tax form, which mimics the IRS Form W-8BEN used by aliens. However, on the fake form,the criminal will request all of the users personal information.

IRS Audit Scams

It is also common for criminals to pose as IRS Agents and state that they are auditing the victim. Usually the criminal will send out a number of emails in the hope that someone responds, thinking they are being legitimately audited.

It is important to note that the IRS will not contact you via email about an audit and to never give out personal information through email.

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