January 29 was the first day that tax returns could be filed for tax year 2017. The IRS expects approximately 90% of returns this year to be filed electronically, and overall 70% of taxpayers should receive a tax refund, averaging $2,895. The other 30% who wait until mid-April to file may be wondering why they should care about the start of e-filing? The reason is that the 29th was also the day fraudsters could begin e-filing fraudulent returns not just to hijack actual refunds due to the 70%, but also seeking bogus refunds in the name of 100% of taxpayers (which eventually will lead to an unexpected and unwelcome tax bill to recoup the bogus refund). Concern about e-filing fraud is heightened this year because of the widespread data breaches in 2017 that compromised personal information of so many people (for example, 145.5 mm people in the Equifax breach alone). In some instances the swindler may need only your name, Social Security number and address to file a return on your behalf.
Fortunately, the IRS has instituted a program for payroll providers to include a "Verification Code" that will appear on your W-2. Many providers are participating in the program.
Nevertheless, you should be especially diligent this year in tracking the progress of your e-filing. The IRS's "Where's My Refund?" site has up-to-date refund status information. The IRS has even provided an app that will allow you to check your refund status. Also, if you inexplicably have been denied credit, find unfamiliar charges on your debit or credit cards, or are otherwise concerned you have been the victim of identity theft, you may want to investigate whether someone has filed a return in your name even if you are not expecting a refund. The IRS has provided a number you can call to do so (1-800-829-2410). This will be a busy time, so be patient and prepared to wait on hold.
Most of us have had little to no control over the unauthorized disclosure of our personal information, especially in 2017, so the best defense against tax return fraudsters is beat them to the punch by filing as early as you can – especially if you are expecting a refund.
Check out our series, Privacy Perils, to learn what steps you can take to guard your personal and company data. For more information about this topic and other cyber security concerns, please contact Bob Brewer, Tony McFarland, Elizabeth Warren or a member of our Privacy & Data Security team.