Tax-return fraud is on the upswing, according to federal authorities. This means your senior clients face greater risks that someone will attempt to file a fraudulent tax return with their name and Social Security Number (SSN). When they file their actual return, they may discover someone has already filed one—and collected a tax refund.
It’s no surprise this form of identity theft is rising. Consumers often don’t safeguard their Social Security numbers, and the IRS is ill-equipped in terms of staff and technology to prevent identity theft. Plus, older consumers may have cognitive deficits or are inexperienced with technology, making them susceptible to tax “phishing” scams.
The numbers tell the tale. The IRS processed about 145 million returns for tax-year 2011. As of May 2012, it had pulled 2.6 million returns for possible identity theft, with 1.5 million documented cases, representing theft of more than $5 billion. According to the Wall Street Journal, the National Taxpayer Advocate, an IRS watchdog group, has seen its identity-theft caseload increase by 650 percent since 2008.