Identity theft and tax refunds are big business for fraudsters. To give you an idea of the scope of this problem, in 2015, from January through November, the IRS rejected or suspended the processing of 4.8 million suspicious returns – the refunds claimed on those returns totaled around $2.9 billion! And that is just for 11 months of 2015. Add to that the fish that get through the net – the IRS cannot catch every fraudulent return and so the numbers are likely much higher. If you are one of victim of a fraudulent return scam, do you know what to do? How do you avoid becoming a target of such a scheme? This post attempts to answer those questions.
First, be proactive and educate yourself. You can read some of the helpful resources produced by the IRS and the Federal Trade Commission (FTC). Some of what the agencies put out is common sense, such as keeping current on anti-virus software, but there are still useful information to be found. You can find these resources here (for the IRS) and here (for the FDIC). Here is a list of some of the tips put out by both agencies:
- Only share personal information through encrypted websites, those which have a https address.
- Shred information which bears personal identification information, such as those with social security numbers and dates of birth.
- Keep tax returns is a secure place.
- Use a strong password and do not use it for all of your logins.
- Be careful of attachments in emails.
Even if you do everything right that doesn’t mean you won’t find yourself a victim of identity theft – data breaches and unscrupulous employees may provide thieves with your information in spite of your best efforts. So be aware of the warning signs:
- Your electronically filed return is rejected as being a duplicate return filed under your social security number.
- The IRS sends you a letter asking you to verify your tax return information.
- You receive wage or income information from an unknown employer or third-party.
- You receive an unexpected refund from the IRS; the IRS notifies you that you owe money for a tax year which you have not filed or which you show no tax due; or you receive a debit card from a third-party which you did not request (fraudsters often convert their ill-gotten gains into debit cards).
- Your credit report shows unexplained or unexpected debts.
If you do find yourself a victim of identity theft or suspect you are a victim, you should take these steps to mitigate or stop further damage:
- File a complaint with the FTC at identitytheft.gov.
- Place a fraud alert with one (or more) of the three major credit reporting agencies: www.Equifax.com (1-888-766-0008); www.Experian.com (1-888-397-3742; and www.TransUnion.com (1-800-680-7289).
- If the IRS sent you a notice regarding potential identity theft, respond to the number provided immediately.
- If a duplicate return has been filed then you should prepare and file the IRS Identity Theft Affidavit Form 14039.
- Contact the Social Security Administration (SSA) if you find discrepancies on your SSA account.
- File a report with your local police department and state Attorney General’s office.
Be aware that even if you are a victim of identity theft through the filing of a fraudulent return, you are required to still file your returns and pay your taxes even if that means you need to file a paper return. If you cannot get help and you’ve previously contacted the IRS, call 1-800-908-4490, the IRS has set up a hotline for taxpayers who are victims of identity theft.
I hope this post provides some helpful guidance on identity theft and the IRS, good luck and here’s to a happy identity theft free end to tax season!
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