You Snooze, You Lose

 
Actually it isn’t quite as bad as the cartoon implies. Tax ID fraud is going up — there were about 1.8 million tax-related ID thefts during 2012, but after a big hassle the victims are reimbursed. Typically they get their refund in about six months, but some are still waiting for refunds from 2011.

The trouble is e-filing makes it easy for criminals. The number of drug dealers in one area went down because it was so much easier and safer just to get money from the IRS. The IRS is taking the matter seriously and says it is taking corrective measures — using better filters, cooperating with financial institutions to prevent the theft of personal information and tracking down and prosecuting offenders. We’ll have to see how well it does.

In the meantime some advisors say the best protection is (1) to do our part to keep our personal data safe and (2) to file early and beat the crooks. Andy and I have decided not to do that second one. We’ll still file by certified mail on tax day and will hope for the best. If we do have problems I’ll write a few blog posts describing the process and we may or may not change our ways.

In a comment at Cheerful Monk tammy said the IRS probably hates her because she does her returns on paper. I figure you’re in good company, tammy. We don’t send sensitive information over the internet, and we don’t intend to start until the whole system seems a lot safer. If someone steals our identities we at least want to make sure it’s not our fault.

What about you? Do you do your own taxes? Do you file either early or late? Do you file electronically?

Thanks to Mike, Rummuser, Cathy, Evan, tammy, Dixie and bikehikebabe for commenting on last week’s post.
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8 Responses to You Snooze, You Lose

  1. Mike says:

    (I was going to do a blog post Monday about tax day and taxes, but scrapped it after the tragedy in Boston.) I’ve only had someone else do the taxes one time and that was for the tax year when I retired. I use tax preparation software and e-file, usually near the deadline, but not always.

  2. Rummuser says:

    I share Ranjan’s CA, the local equivalent of your CPA to maintain and handle all my accounting including filing tax returns and claiming refunds if any. Yes, we file electronically because it is compulsory here now, but signed hard copies are also to be submitted. Typical Indian bureaucracy which is in transition.

    Now, you too have become like my tax man asking me to do sums!

  3. tammy j says:

    you already know this dearest monk! but i’m loving living in this tiny apartment. next year no interest to claim… or anything else for that matter. LOL.
    anything i can make simpler i will. it is a mandate of my happy life.
    they keep saying the internet is perfectly safe for all the personal stuff people do on it. and then we are reminded it is not.
    i simply lol key word simply prefer paper and pen. thanks!!!
    hugs to you. my fellow simplifier.

  4. Evan says:

    I file electronically. The files are pretty secure here.

    Existing data gets filled automatically which makes life much easier.

  5. Jean says:

    Mike,
    I sure hope they find the guys who did it. One fellow who was wounded says he looked into the eyes of the guy who dropped one of the backpacks. Apparently he helped the FBI pick the suspects out of the surveillance tapes.

    When you file electronically do you have to send in the forms we have to include when we file by mail? Or do they just ask for them if there’s a problem?

    Rummuser,
    I can actually understand asking for both — it’s easier to process the data when they have the digital file, but they have the paperwork if they need to check what you’ve included.

    The tax code our IRS uses is over 14000 pages long and is printed in 20 volumes. For curiosity I went on the Government Printing Office site but couldn’t figure out how much the whole thing would cost. (I wrote to them to find out the number of pages. They said I could find the cost on their site). It was confusing for this mere mortal. Not that I would pay to buy them. My curiosity doesn’t extend that far! Also some taxpayers couldn’t file until last month because of the new changes Congress made at the end of last year. The IRS was still updating its computer system. That was only for people who used forms for more esoteric deductions than we use. There’s a lot of talk about how many billions of dollars are wasted each year because of the complexity of the tax code, but I agree with the fellows who say it won’t be simplified because it’s more advantageous for the politicians to add loopholes and exemptions than it is to take them away.

    tammy,
    I agree — I like doing it by hand. Since I have to do it one way or another. :)

    Evan,
    Yes, TurboTax (the software Andy uses) does put in a lot of the data from last year. It helps a lot. It would probably be fine if we e-filed, but we feel more comfortable using the old way. I wouldn’t be surprised if they eventually charged us if we don’t e-file.

  6. Cathy in NZ says:

    I’m not involved in filing such a form, as I’m in the workforce or have anything that needs such a system.

    However, every few months, I have to fill out a form which runs 4 pages and starts with #1 at times it might say if you have checked “no” move 4 numbers along. Then I have to make an appointment and then go to said place. Sometimes, I get seen at counter whilst other times, I have to sit and let someone make sure I have all the boxes checked properly and that whatever I have said is correct!!

    A few weeks later a letter arrives with very little to say other than “no changes” and a date when next review will be needed…

  7. Jean says:

    Cathy,
    What a pain! We had to do something similar when we lived in France for a year. Once we had to have a letter from our landlord verifying where we lived. Simple enough? Not really. We had only one letter and it couldn’t go into each of our files. After a lot of hand wringing and head scratching the fellow had an “aha!” experience. He put the letter into Andy’s file and had Andy write a letter for my file saying I lived with him. Voila!

  8. Mike says:

    All of the information that goes into the forms goes into some kind of electronic format that gets processed at IRS. I’m not even sure a human even looked at ours, or even if they did, it was only a cursory, since I got a text message that the return had been approved 2 1/2 hours after I filed.

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