TROY — Taxpayers lost an estimated $23 billion to stolen tax returns last year, affecting approximately 2.4 million people, according to a report by the Treasury Inspector General for Tax Administration.
The Internal Revenue Service (IRS) began accepting individual returns last month as financial experts warn that widespread data breaches have made identity theft a risk for all filers.
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The loss of funds occurs when scammers use personal information found on the dark web to file returns in a victim’s name. Experts at the credit bureau Experian and local financial advisers say that filing early is the most effective way to prevent fraudsters from stealing a taxpayer’s refund.
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The IRS expects to process 164 million individual tax returns during the current season. This high volume provides a large window for potential fraud as scammers attempt to use stolen personal data to file fraudulent returns before the actual taxpayers can submit theirs.
Michael Bruemmer, head of global data breach resolution for the credit bureau Experian, explained that nearly everyone has some level of digital exposure.
“There is at least some component of every US individual, let alone around the globe, information out on the dark web,” Bruemmer said.
Outlook Financial Center CEO Rob Burnette in Troy, said the current busy season has already seen many clients submitting their paperwork. He noted that the primary defense against tax identity theft is to file as early as possible.
”You’re reducing the window for scammers and fraudsters to invade your return file, a return for you, and really cause some identity theft issues," Burnette said.
Beyond security concerns, Burnette pointed out that filing early provides a financial advantage for those expecting a payout from the government.
“If you’re getting a refund, you get your refund sooner,” Burnette said, adding that his office encourages taxpayers to start the preparation process even if they have not received every necessary form in the mail.
For clients waiting on specific documents, Burnette’s center uses a flagging system to organize the return in advance.
“We put a flag on it. Don’t file this yet, because we’re waiting for it and we outline what it’s waiting for,” Burnette said.
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