- Fraudulent Returns — Cyber criminals often file a return for a child, an adult whose income doesn’t merit a return or even a deceased person. A 2013 report by the Treasury Inspector General found the Internal Revenue Service (IRS) gave away nearly $4 billion in fraudulent tax refunds the previous year. Many consumers also begin to file their tax returns only to find out that someone else illegally filed a return in their name. Fraudsters often receive returns on to pre-paid cards which are then turned into cash. The taxpayer is then left to deal with the inconvenience and hassle of reporting the crime to the IRS, filing a proper return and protecting their data and identity from fraudulent use.
- Identity Theft — After a legitimate user files his or her tax return online, cyber criminals can compromise the system and steal personally identifiable information typically included in a return, such as names, banking accounts and social security numbers. In the first half of 2013 alone, 1.6 million taxpayers were affected by identity theft.
ThreatMetrix explains the risks consumers face during tax season and strategies to protect taxpayer identities, especially when filing online returns. Of all potentially fraudulent tax returns, 93 percent are filed online, asserting the heightened need for preventative cybersecurity measures to protect tax e-filing.