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Protect returns and incentive payments from identity thieves



In recent years, IRS measures against tax identity fraud have succeeded in driving down the tax rate. Then the COVID-19 pandemic happened. The IRS has extended the due date and is stuck trying to process returns while keeping its employees safe. In addition, U.S. stimulus payments were administered as tax refunds and the federal government improved government unemployment benefits. Identity thieves had more financial incentive than ever to commit tax and benefit fraud.

The effect was immediate: At the end of February 2020, identity theft with tax returns had already increased by 751% compared with the previous year. In June, 892,777 tax returns had been flagged by the IRS for potential identity theft. [2] But there is good news – you can take action now to protect your identity as well as any tax refunds or incentive payments to you 2021.

How tax return fraud occurs

Tax-related identity theft can make taxpayers confused and frustrated, but the mechanics of it's pretty simple. First, the identity thief receives sensitive information about you, including your name, address and personal tax identification number. They can either buy the information from criminal sources or trick you into giving it to them through phishing or phone scams. Then they use it to submit a tax return with a fake address or mailbox and wait for the refund check to roll in. Victims of Tax Return Fraud:

  • The IRS or any other tax authority rejects your attempt to file your tax return.
  • The tax authority requests verification of your identity, which indicates that something may be wrong.
  • Income is reported by two or more employers, probably because someone else has used your tax identification number to get a job. Your return may be flagged for not paying adequate taxes on salaries or reporting all salaries. [3]

Benefit from the new IRS Identity Protection PIN

In January, the IRS Identity Protection PIN extended the Opt-In program to all taxpayers who can verify their identity. [4] Identity Protection PIN (IP PIN) is a six-digit code that you establish with the IRS that is known only to the agency and you. The IP PIN is a great way to lock out identity thieves and prevent them from filing fraudulent tax returns with your personal information. The IP PIN is valid for one calendar year, so mark your calendar to get a new one at the beginning of each year.

Solve tax-related identity theft

If you discover that you have been a victim, follow these steps:

  1. Contact your tax authority and fill in the paper for identity theft.
  2. Submit your correct return with the instructions they give you.
  3. Contact the credit bureaus and place a fraud alert on your account.
  4. Reply immediately to all correspondence from your tax authority.
  5. Keep excellent records of all your correspondence and filing.
  6. Add a credit monitoring and identity protection service to identify additional identity theft or fraud in other parts of your life. ] We have partnered with CyberScout to offer comprehensive identity management services. Central Identity Fraud Approval offers protection against the devastating effects of identity theft costs, as well as identity management and recovery services. Central has partnered with CyberScout ™, one of the nation's leading providers of identity management solutions, to offer the following services:

    • Identity Management:
      • Personal, proactive identity management for every step of life.
    • Identity Travel Assistance:
      • Free worldwide access to CyberScout's fraud specialists should identity documents be lost or stolen during the trip.
    • Unlimited Identity Theft Resolution Services:
      • Fraud Specialists Provide Unlimited Help To Restore A Victim's Identity
    • Cost Reimbursement:
      • Lost Wages Due to Time Lost work
      • Kreditbyrå reports
      • Fees for re-application for loans rejected due to forged credit information
      • Postage, telephone and shipping fees
      • Some legal fees caused by identity theft
      • Notary and archiving fees

    To learn more about the rotation of Identity Fraud Protection, or for an insurance quote, contact your independent insurance agent.

    Blog content licensed by CyberScout. © 2021 CyberScout, LLC


    [1] “Interim results for the 2020 filing season,” Treasury Inspector General for Tax Administration, April 7, 2020.

    [2] “Interim results for the 2020 filing season: Effect of shutting down COVID-19 on tax management and customer service activities and assessment of efforts to implement legislative provisions, ”Treasury Inspector General for Tax Administration, June 30, 2020.

    [3]“ Taxpayer Guide to Identity Theft, ”IRS website, page updated October 22, 2019.

    [4] "All taxpayers are now entitled to PINs for identity protection," IRS, January 12, 2021.


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