Identity Theft and Fraud

Identity theft occurs when someone uses your personal information, such as your name, Social Security Number, and other identifying information, without your permission to commit fraud or other crimes. Identity theft to commit tax refund fraud is a growing problem across the U.S., and the staff at the Vermont Department of Taxes is working hard to prevent this type of criminal activity in Vermont.

How Is Identity Theft Detected?

The Department of Taxes often discovers incidents of identity theft while reviewing tax returns for possible fraud. Tax refund fraud usually is detected when two people file tax returns for the same year using the same name and Social Security Number. While detecting tax fraud can be time-consuming, diligent monitoring by the Department has prevented hundreds of thousands of dollars of fraudulent tax refunds from going out the door this year alone.

Identity theft is a well-known problem, and can result from a data breach, scam, or loss of a wallet, criminals are capitalizing on identities that they have stolen elsewhere to victimize Vermont taxpayers.

Identity theft and fraud are two terms that are used often, and sometimes interchangeably. However, there are a few key differences between the two crimes.

What is Fraud?

Fraud occurs when a thief either creates a person who does not exist with fabricated personal information or obtains your personal information to commit crimes. This information is used to set up accounts with lenders, merchants, credit card companies, and financial institutions. These types of crimes may be committed by individuals or a group.

Victims of fraud can include but are not limited to:

  • Lenders
  • Credit card companies
  • Merchants
  • Other organizations

Inadvertently, the public becomes victims of fraud, since the lenders, merchants, and other organizations must factor these costs into the price of doing business, raising the prices of goods and services to their customers. Fraud is often the result of identity theft.

Cyber-Crime

Overview

We are living in a time of cyber-crime, and criminals are using personal information, such as your name and Social Security Number, that they have stolen to file false tax returns. Criminals use the identifying information they have obtained illegally to file a tax return in your name and claim the refund that rightfully belongs to you. The Vermont Department of Taxes has sophisticated systems in place to detect and prevent tax refund fraud.

While all staff are tasked to be watchful for fraud, the Department has allocated additional staff to work on fraud detection full-time. Staff manually review individual returns that have been flagged electronically to determine which returns are fraudulent and to pay legitimate requests for refunds. Taxpayers should be aware that the Department works with the IRS, other state revenue departments, and companies and trade associations in the tax and financial services industries to develop and implement new procedures to help protect taxpayer money.

Threats You Should Know About

Debt Collection Scams

Persons unauthorized by the Department of Taxes may contact you, usually by telephone or email, and demand immediate payment of tax debt. These criminals sometimes pose as employees of the Vermont Department of Taxes, or they may pretend to be an outside collections agency acting on behalf of the Department to collect tax debt.

Criminals who operate this type of scam are experts in persuasion tactics, often using threats and bullying. If you aren’t sure whether a telephone call or email is real or a scam, do the following:

  • Hang up. Do not engage in conversation with the caller over the telephone.
  • Delete the email. Do not open any email attachments or click on any hyperlinks.
  • Do not give out any personal information until you are certain the call or email is genuine.

Contact us to verify if you owe real tax debt and if we have assigned your debt to an outside collections agency at (802) 828-2518.

Scam artists also pose as the agents of the federal Internal Revenue Service (IRS). Find out more about these types of scams from the IRS.

Phishing

Phishing attempts can look like a valid email, but have a link that takes you to a website designed to capture your personal information. The IRS has issued helpful guidance on phishing schemes.

Do You Believe You Have Become a Victim Of Identity Theft?

If you suspect an email is fraudulent, do not respond and do not open attachments. Delete the email. Similarly, phone calls should be disconnected. Do not engage in conversation with the caller. If you wish to verify a communication or report a scam, contact the Department of Taxes.

If you have been contacted by an IRS telephone scam, please report it to the Vermont Attorney General at: (800) 649-2424 or visit the Consumer Assistance Program website for more information.

Report identity theft and create a recovery plan at IdentityTheft.gov. Find out how you can protect yourself from identity theft and fraud.