02/21/2013 08:07 am ET Updated Apr 23, 2013

Procrastinating at Tax Time Can Cost You Your Identity

March is right around the corner. A full month after the official start of tax season, and for those of you who still haven't filed your taxes yet, you should know that as you're busy collecting your receipts and tax documents, there are people out there getting ready to steal your identity and your tax return. As if taxes weren't enough to worry about, now you need to consider other risks like identify theft and your taxes. It's frightening, but it's a very real threat for millions of Americans. How exactly does ID theft happen at tax time?

Criminals steal identities by accessing computer programs, going through trash, by sending out e-mails requesting personal information under the guise of a business you are using or do use and just about every other way imaginable. Getting your personal data is getting easier and easier and once it's in the hand of criminals, they use the stolen names and Social Security numbers to create fake W-2s with false wages and withholdings that are then used to file fraudulent tax returns. The false earnings and withholdings are set up to land them a big refund, all before the actual taxpayer even knows what's going on.

Typically, taxpayers don't realize anything is wrong until they file their taxes and find out a return has already been filed in their name. While the IRS has processes in place to help taxpayers whose identity has been stolen or compromised, there is an increase in time to process your tax return and refund due to the amount of time it takes to verify your return as yours.

The IRS is working hard to combat identity theft. Earlier this month, they announced that a massive national sweep in January targeting identity theft suspects in 32 states and Puerto Rico led to 109 arrests and 189 indictments. The effort is part of a continuing identity theft push that has seen the tripling of criminal investigations into identity theft since 2011. But despite the best efforts of the IRS and other groups, the criminal activity of identity theft and refund crime continues to grow, and by very large amounts, and in a variety of increasingly creative ways.

While the IRS has dozens of identity theft screens now in place to protect tax refunds, the best way to protect yourself is as simple as filing your own return early. As soon as you have all of your tax documents, get that return completed before someone else can file in your name.

The IRS suggests a few additional ways to protect yourself at tax time. Taxpayers should know:
  • The IRS will not initiate contact by email or social media to request personal information. If you receive an email asking for this information, do not reply and forward it to
  • If your Social Security number (SSN) is stolen, fraudsters may file a return under your name, but they can also use it to obtain employment, making it look like you haven't reported all of your income. Contact the IRS if you become aware of any wages being claimed under your SSN.
  • A safe practice not just at tax time--choose a strong and unique password for online accounts, but especially when preparing your tax return.

ID theft is scary and time consuming, and it can end up costing you a lot of money. But the good thing is that there are ways to protect yourself if you know what to do and what to look for. So take an easy step and start by getting your income taxes filed as soon as you can and lock the bad guys out.