According to the Federal Trade Commission, tax return related identity theft has topped the list of identity theft complaints filed for the past five consecutive years. It has cost the US Treasury billions of dollars in fraudulent refunds, and cost taxpayers a great deal of time and stress to resolve cases (the average case resolution time is ten months). Unfortunately, we’ve seen this issue affect several clients this year and wanted to share some information that may help protect you from this kind of identity theft.
Tax-related identity theft occurs when someone uses your stolen Social Security number (SSN) to file a tax return claiming a fraudulent refund. Almost all cases are initially identified when you file your tax return and are then notified by the Internal Revenue Service (IRS) that a tax return has already been filed under your Social Security number. Identity thieves of this type consistently file the fraudulent tax returns very early in the tax filing season in order to get ahead of the average taxpayer. In addition, they can be savvy posing as IRS employees via the phone. Per the first item below—the IRS will never initiate contact with you by phone, so do not carry on a conversation with anyone calling who claims to be with the IRS.
How to reduce your risk of tax-related and other forms of identity theft:
- Be aware that the IRS never initiates contact by email, phone or text message to request personal information. IRS communication is always initiated through written correspondence.
- Complete tax return filings, make tax payments, and receive tax refunds electronically when possible as it avoids having your return being delivered through the mail.
- Don’t routinely carry your Social Security card or any document with your SSN on it.
- Don’t provide a business your SSN just because they ask—provide your SSN only when you are convinced that it is absolutely necessary.
- Protect your personal financial information at home and on your computers.
- Check your credit reports and social security administration report of earnings records annually.
- Protect your personal computers by using firewalls and anti-spam/virus software. Update security patches and change passwords regularly for web accounts.
- Shred mail such as “pre-approved” credit card applications and any reports containing financial account data.
- Don’t provide personal information over the phone, internet or through the mail unless you have initiated the contact or are certain you know who is asking—and for what purpose.
Our team has identified specific steps to take for anyone who finds themselves a victim of any type of identity theft, including tax-related. We are here to assist you, so in the unfortunate event you find yourself in this situation, contact us right away. For more information, we suggest the U.S. Department of Justice website: irs.gov/uac/Taxpayer-Guide-to-Identity-Theft