Tax Tip Tuesdays Strategy No. 4: Top 3 questions our clients ask about tax return ID theft
State Government’s measures to prevent fraud
Brown CPA Group, Ltd., – Tax Tip Tuesdays
by Ken Smith
Tax Tip Tuesdays Strategy No. 4: Top 3 questions our clients ask about tax return ID theft:
(1) Is your State Income tax refund going to be safe from hackers?
(2) Will filing early help reduce the risk it could happen to you?
(3) Will my return be delayed because of the Budget impasse in Springfield?
We’ve all heard the horror stories of “hackers” attempting to get tax-payers refunds by filing for them first. The Illinois Department of Revenue (IDOR) announced that they do not anticipate releasing Individual Income Tax refunds for the 2016 tax filing season until after March 1, 2016. The decision comes as fraud prevention efforts from last year’s tax season illustrate the positive impact that additional delays and scrutiny have had in combating tax return fraud and identity theft. IDOR is reminding taxpayers that filing tax returns electronically and requesting direct deposit into a checking or savings account is still the fastest way to receive a refund.
How wide spread is tax fraud in IL?
Both the IRS and the State of Illinois actively investigate and prosecute identity theft. For the top ten IRS identity theft prosecutions, click here: https://www.irs.gov/uac/Newsroom/IRS%E2%80%99s-Top-Ten-Identity-Theft-Prosecutions
“Fraud prevention measures implemented by the Department of Revenue during last year’s tax season resulted in an overall savings of nearly $5 million that would have, otherwise, been paid,” said Connie Beard, IDOR Director. “Our new security protocols proved very beneficial in detecting and stopping fraudulently filed returns last year, and we are continuing to enhance our fraud detection efforts this year. By delaying tax refunds by just a few weeks, we’ll be able to better detect attempts at identity theft and ensure taxpayer refunds do not fall needlessly into the hands of criminals.”
For electronic returns filed prior to March 1, 2016, IDOR anticipates refunds will be issued within two to three weeks from the March 1, 2016 date. For electronic returns submitted error-free on or after March 1, 2016, IDOR anticipates refunds will be issued within two to three weeks from the date the return was submitted.
Tax refunds are not subject to budgetary appropriation by the Illinois General Assembly and are, therefore, not impacted by the current budget impasse. For the most up-to-date information, forms, schedules, and instructions for the 2016 Illinois Income Tax Filing season, please visit IDOR’s website at: tax.illinois.gov.
“We have certainly implemented new security protocols, and we did this last year,” said Terry Horstman, a department spokesman, in an interview. “They proved very beneficial in detecting and stopping fraudulently filed returns last year. We will continue our fraud detection efforts this year, and delaying those tax returns by just a few weeks will also allow us to better detect attempts at identity theft and ensure refunds go to the people to whom they belong.”
It may be safest tax strategy for the state to delay processing your tax return, but for individuals and small business, the safest strategy for taxpayers is to file your tax returns as soon as possible. This is because filing your tax return early reduces the likelihood of identity theft because early filing gives identity thieves a shorter window to attempt to steal your tax refund.
To schedule an appointment to implement this strategy and others within the context of your unique tax situation, Contact Brown CPA Group, Ltd., at (847) 509-4100.
About the author: Ken Smith is an Enrolled Agent and Senior Staff Accountant with Brown CPA Group, Ltd. We know that success means different things to different people. While a business owner strives to maximize profits, increase efficiency and plan for succession; an individual client is more concerned with tax planning, wealth management, retirement and estate planning. At Brown CPA, we work with you on the total picture. Together, we succeed.