File Taxes Early to Cut Risk of ID Theft

Computer hackers stole more social security numbers than credit card numbers for the first time ever.

Social security numbers were compromised in 35 percent of security breaches during 2017, while credit card numbers were compromised in 30 percent of breaches, Javelin Research & Strategy reported in its annual fraud study. 

Each year during tax season, the IRS encourages taxpayers to file early to reduce the risk of tax identity theft.

Tax identity theft is when someone uses another person's personally identifiable information to file a tax return in their name.

"The IRS will tell you that probably something like 14 percent of all refunds are claimed inappropriately," the commissioner of the Connecticut Department of Revenue Services, Kevin Sullivan, said.

Sullivan said each year, his office is stopping more and more refund fraud.

"It’s around $20 to $30 million that doesn’t get taken because of the steps that we have taken to make sure that it’s not stolen," he said.

The IRS also reported a significant drop in fraudulent filing for the second year in a row. The decline is largely attributed to efforts of the Security Summit, a collaborative effort among the IRS, state tax agencies and industry partners, including tax preparation and software firms.

In Connecticut, safeguards include extra steps to verify your identity and even delaying your tax refund if your account is flagged.

"We actually hold up refunds longer than we used to because the more you can slow it down, the more you have a window of opportunity to stop it from being stolen," Sullivan said.

Sullivan said first-time taxpayers in Connecticut cannot opt for direct deposit. Instead, they will be sent a paper check. The process takes a little longer and DRS can stop a payment in cases of suspected fraud.

Sullivan also said DRS will not allow direct deposits to certain accounts, banks or financial institutions with a suspect record.

"We want to make sure people do get their money. But we want to make sure they get the money that they’re due and that somebody else doesn’t," he said.

For more information on preventing tax-related identity theft, visit the Identity Theft Resource Center.