DailyFinance.com calls tax identity fraud a "specialized and sophisticated form of theft."
According to a post on the site, thieves are stealing year-end statements, W-2s and other income information to file returns on victims' behalf. The report says that during the 2011 tax processing year, roughly 940,000 tax returns were filed fraudulently, and this year, that number will likely increase to 1 million.
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How do you protect yourself? First, shred any paperwork you don't need for tax preparation. Second, be wary of a slow-running computer or out-of-place pop-ups when filing taxes online. Also, be suspicious of any phone calls or e-mails claiming to be from the IRS, even with the appropriate logos. According to the IRS website: "The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels."
Finally, don't put your return in the office mailbox or in the outgoing mail bin at work. Instead, take your forms directly to the post office as tax returns are easy to identify.
Anyone who suspects they have been the victim of fraud should call the IRS Identity Theft department at 800-908-4490 with a copy of a police report, the completed IRS affidavit Form 14039 and state-issued identification. More information can be found in the Taxpayer Guide to Identity Theft on the IRS website.
Have you been the victim of tax identity fraud? What did you do? Tell us in comments.