The season for filing taxes, and in some cases obtaining returns, has arrived. While many will enjoy a desired (and in some cases desperately needed) sum of money, some will be unpredictably victimized by tax fraudsters.
Franchise Owner for both the Abilene and Newton H&R Block Paul Brunson said the Protecting Americans from Tax Hikes (or PATH) Act has changed the way taxes are handled by tax preparers, but will ultimately help prevent adding more money to the billions already lost to tax criminals.
Brunson said part of the PATH Act has made some temporary tax credits and deductions permanent, so preparers will not have to guess about whether or not to include them.
According to the Internal Revenue Service (IRS) website, The PATH Act mandates that the IRS will not issue refunds on tax returns claiming the Earned Income Tax Credit or Additional Child Tax Credit until Feb. 15.
That additional time is designed to help the IRS stop fraudulent refunds from being issued to identity thieves, as well as fraudulent claims with fabricated wages and withholdings.
If things don't add up, Brunson said the IRS will delay the refund and send a letter. If someone has stolen a person's information or identity, is making up W-2s, is altering tax data or committing some other type of tax fraud, the IRS will be more likely to catch it.
Before, Brunson said the IRS took for granted that social security numbers were valid, and issued refunds more quickly. That led to large amounts of money being direct deposited into fraudulent accounts and quickly moved elsewhere.
Brunson said the IRS is now, thoroughly comparing information from those who have submitted their taxes to employer information – to make sure fraudsters do not receive filers' refunds.
As people will likely not will get their returns until March, Brunson said business for tax preparers such as H&R Block is far behind last year's numbers, and the IRS is also behind in receiving tax information.
Now that people have their W-2s, the sudden surge in business is creating a bit of an overload for H&R Block and other preparers. Brunson said the filing process is seeing a large uptick after being initially slowed by the PATH Act.
While the slower return process is getting people their money later, and has created a peak in the task of preparation, Brunson said it is important to have these safeguards against fraud.
Nonetheless, there are a lot of people that desperately need their tax return money for debts or bills, and Brunson said a slow return can be especially hard for those people.
For that reason, H&R Block and other preparers sometimes offer optional cash advances on their returns, which are usually based upon the overall size of the expected return.
Brunson noted that H&R Block also offers a Tax Identity Shield product for customers. It is designed to block fraudsters from stealing an identity and filing taxes through the use of an Identity Protection PIN.
The Tax Identity Shield works by creating a special PIN for next year's taxes. If the PIN holder – the actual tax filer – has had a fraudulent return filed with their information, it can block attempts for fraudsters to use their information the following year (as they will not have the customer's PIN).
Overall, Brunson said people need to do what they can to protect their information and keep it from falling into the hands of the wrong people. He noted that many people often take the physical copy of their recently filed taxes – with all the information needed to steal their tax identity – and leave it in plain site.
Identity theft is something that can happen to anyone and many Americans have already experienced it firsthand. At one point, Brunson said even one of his own medical cards was used fraudulently.
"People need to guard their personal information, keeping it locked away," Brunson said. If those people have already been victims of identity theft, something like an Identity Protection PIN might be an additionally useful option.
Adult Services Supervisor for Newton Public Library Dan Eells said he could not comment on tax fraud.
However, Eells said the IRS now requires people who will have their taxes done for free at the library to bring a valid photo ID and their social security card. Paper IDs will not work.
For those who are filing jointly, Eells said spouses will also need to also bring photo IDs.
The NPL will begin its free tax filings on Feb. 8 and will be running through April 12.
NPL preparers are volunteers and will be working with a new IRS-approved software. However, Eells said volunteer tax preparers still need to pass a test through the IRS to be certified, and that test is not easy.