As Americans prepare their tax returns this year, it’s important to be on the lookout for any signs of suspicious activity in order to avoid becoming a victim of identity theft.
In 2021, there were more than 1.4 million reports of identity theft across the country and tax-related identity theft is most common during tax filing season, according to the Federal Trade Commission (FTC). In fact, since the pandemic, tax-related identity theft reports are up 45% compared to pre-pandemic years.
Identity theft can happen in a variety of ways when someone uses your personal information to open financial accounts, make purchases or file taxes. This tax season, the Internal Revenue Service (IRS) is reminding everyone to protect their financial information in order to avoid identity theft, fraud and scams.
According to the IRS, tax-related identity theft has “evolved into a major enterprise by well-funded, technically sophisticated national and international criminal syndicates.”
In order to find out where identity theft is the most common, we analyzed FTC identity theft reports in each state as well as major metro areas across the country.
States with the Most Identity Theft Reports
While no state is immune to identity theft, there are some states which experience higher volumes of identity theft than others. According to the FTC, the smallest state in the country, Rhode Island, is home to the most identity theft reports per capita (2,857 per 100,000 residents). Since 2017, Rhode Island has reported an average of 9,265 identity theft reports annually, or 876 per 100,000, according to the FTC.
Two other northeastern states, New York (No. 8) and Delaware (No. 9), also rank within the top 10. Rounding out the top 10 states with the most identity theft reports are Kansas (No. 2), Illinois (No. 3), Louisiana (No. 4), Georgia (No. 5), Nevada (No. 6), Colorado (No. 7) and Florida (No. 10). All of these states reported more than 500 identity theft reports per 100,000 residents in 2021.
Increase in Identity Theft During the Pandemic
The Covid-19 pandemic uprooted the lives of Americans both personally and financially. Unfortunately, identity theft reports skyrocketed throughout 2020 and 2021. Kansas saw an incredible 94.75% increase in identity theft reports during 2020-2021 compared to 2017-2019 and Rhode Island saw a 94.66% increase. Prior to 2020, Kansas averaged 2,171 identity theft reports, but that number jumped to an average of 41,335 per year during 2020 and 2021. In Rhode Island, pre-pandemic identity theft reports average 1,145 per year, but they increased dramatically to an average of 21,446 per year during 2020 and 2021.
Illinois also saw a massive increase in identity theft reports during the pandemic with an average increase of 85.39% when comparing 2020 and 2021 annual averages with pre-pandemic annual averages. Overall, Illinois was averaging 18,420 reports per year pre-pandemic, but during 2020 and 2021, the state averaged 126,048 annual reports.
States that saw the lowest increase in identity theft include South Dakota (33.79%), Michigan (36.93%) and Connecticut (38.19%).
Metro Areas with the Most Identity Theft Reports
Along with analyzing identity theft reports by state, we also took a look at which metro areas experience the most identity theft.
According to the FTC, not only is Rhode Island the top state in the nation with the most identity theft, but it’s also home to the number one metro area in the country with the most identity theft reports. In 2021, Providence reported 1,981 identity theft reports per 100,000 residents.
Coming in at No. 2 is Lawrence, Kansas with 1,779 reports per 100,000 residents followed by Topeka (1,548), Wichita (1,378) and Lafayette, Louisiana with 1,212 reports per 100,000.
Elsewhere, major metro areas like Chicago (975 per 100,000), Houston (817 per 100,000), Atlanta (850 per 100,000) and Miami (839 per 100,000) all made the list of top 25 metro areas with the most identity theft reports.
Whether you’ve already filed your taxes, preparing to file or awaiting your tax return, it’s important to spot the signs of identity theft.
Overall, the IRS has protected “a combined $26 billion in fraudulent refunds by stopping identity theft refunds.” Several security initiatives have also been put in place by the IRS to protect data when filing taxes, including the option for taxpayers to request an Identity Protection PIN (IP PIN), which was introduced in 2021.
But there is still more that taxpayers can do in order to prevent identity theft. The IRS recommends using encryption programs to protect sensitive data, virus protection software, strong passwords and protecting personal information such as your Social Security number are all important steps to take when it comes to protecting your identity and data during tax season.
And if you are considering a 1031 Tax Deferred Exchange for your investment property, especially during tax season when identity and cyber fraud are heightened, it’s imperative that the profits from your sale are protected. Learn more about IPX1031’s industry leading security and safety for exchangers and safeguards in place when selling and buying investment properties.
Using data from the Federal Trade Commission’s Consumer Sentinel Network, we analyzed identity theft reports in every state and visualized the data per capita (per 100,000 residents). Data for the top 25 metropolitan areas with the most identity theft was also analyzed for this report. Categories of identity theft reports include government documents or benefits fraud, credit card fraud, loan or lease fraud, bank fraud, employment or tax-related fraud and phone or utilities fraud. Data was analyzed for 2017, 2018, 2019, 2020 and 2021. State population estimates are based on 2019 U.S. Census Bureau estimates.
Federal Trade Commission: Consumer Sentinel Network
Internal Revenue Service
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