Identity theft has been making headlines frequently in recent years. The motive behind stealing someone’s identity is to use their personal information for financial gain. In the world of taxes, identity theft is when someone uses another person’s Social Security number (SSN) or Employer Identification Number (EIN) to file a tax return in efforts to acquire a refund that is not rightfully theirs.
In the case of having your identity stolen, you will be notified by the IRS that a tax return using your SSN has already been filed. The IRS has recognized this issue and has made continuous efforts to seize identity theft with a strategy of prevention, detection and victim assistance - the agency has saved millions of dollars in refunds from getting into the wrong hands.
However, do not completely rely on the IRS to keep your information save. Understand and implement tips such as these to protect yourself against having your identity stolen:
1. Taxes. Security. Together. This is an IRS awareness program launched 2015 to inform people about ways to protect their personal data. Visit this link to learn more: www.IRS.gov/TaxesSecurityTogether.
2. Protect your Records. Taxpayers should not carry their Social Security card on them unless it is necessary for a specific situation. The same goes with providing your SSN – there are instances that require it, but question if that instance should call for such information. At home, protect personal computers with anti-spam and anti-virus software. Passwords should be changed routinely for online accounts.
3. Don’t Fall for Scams. Impersonating banks, credit card companies and even the IRS in hopes of stealing personal data is extremely common. Recognizing and avoiding those inauthentic communications is pivotal in protecting your information. It is important to note, the IRS WILL NOT call a taxpayer threatening a lawsuit, arrest or to demand immediate payment.
4. Report Tax-Related ID Theft. Reporting an ID Theft case is important – according to the IRS, if you are unable to e-file your return because someone already filed using your SSN:
File a tax return by paper and pay any taxes owed.
File an IRS Form 14039, Identity Theft Affidavit. Print the form and mail or fax it according to the instructions. Include it with the paper tax return and/or attach a police report describing the theft if available.
File a report with the Federal Trade Commission using the FTC Complaint Assistant.
Contact Social Security Administration at www.ssa.gov and type in “identity theft” in the search box.
Contact financial institutions to report the alleged identity theft.
Contact one of the three credit bureaus so they can place a fraud alert or credit freeze on the affected account.
Check with the applicable state tax agency to see if there are additional steps to take at the state level.
5. IRS Letters. You may receive a letter asking for verification of your identity by calling a special number or visiting an IRS Taxpayer Assistance Center. This would happen in the instance of what the IRS considers, a “suspicious return.”
6. IP PIN. If your identity theft is confirmed, the IRS may issue you an IP PIN. The IP PIN consists of six unique digits that the taxpayer uses to e-file their return. For each year thereafter, they will receive an IRS letter with a new IP PIN.
7. Report Suspicious Activity. Fairly obvious, but if you suspect or know of an individual or business that is committing tax fraud, you should visit the following site and take the indicated steps: How to Report Suspected Tax Fraud Activity.
One of the largest issues we hear about from our clients is fictitious communication from The IRS – the agency does not initiate contact via social media or text message. Initial contact will usually come in the mail. Utilize the aforementioned tips to ensure you are doing everything you can to keep your identity safe. In the unfortunate circumstance that a tax return is fraudulently filed with your information, reach out to us and we will be happy to help!