Identity theft: we’re all afraid of it, but what if there was a way to alleviate that fear? Understanding identity theft and knowing how to protect yourself is the best way to ease your mind.
What is tax related identity theft, anyway? In simple terms, tax related identity theft is when someone steals your Social Security Number (SSN) and uses it to file a fraudulent tax return to claim the tax refund.
How do you know if you’ve been victimized? There are a lot of warning signs and signals that you may be in danger or are being victimized by an identity thief. If the IRS or your personal tax professional contacts you about more than one tax return filed under your name and SSN, if you owe additional tax or have collection actions taken against you for a tax year that you have not filed a return for, or if your IRS records indicate that “you” received some sort of income from an employer you do not work for, you may be in danger of having your tax identity stolen. Also possible is a scenario in which you may discover that a return has already been filed using your SSN AFTER you efile your return. The IRS may also contact you via a letter stating that they have received a suspicious tax return filed under your SSN. Receiving this type of correspondence indicates that you are in danger or have been victimized.
Now you know what tax related identity theft is and what the warning signs are. But what do you do if you think your tax identity has been stolen? First, you will not be able to efile your tax return to the IRS. However, you still will have to file your tax return on paper and pay any taxes due, if any. If it is determined that you are a victim of tax related identity theft, you should file a complaint with the Federal Trade Commission at https://identitytheft.gov. You should place what’s called a “fraud alert” on your credit records. You can do so by contacting any of the following major credit bureaus: Equifax, www.Equifax.com, 1-888-766-0008, Experian, www.Experian.com, 1-888-397-3742, or TransUnion, www.TransUnion.com, 1-800-680-7289. Next you should contact your bank or other financial institutions and close any account, financial or credit, which may have been tampered with or used without your permission.
If you feel as though your SSN has been stolen or compromised, the prudent course is to respond to any IRS notice immediately by calling the number provided on that notice. Complete IRS Form 14039 (Identity Theft Affidavit) if your efiled return is rejected due to a duplicate being filed under your name or if you are instructed to do so by the IRS. The Form 14039 can be found at https://www.irs.gov. Print the form and attach it to your paper return. Then mail your return using certified mail as per the instructions on the form and website. You will receive an acknowledgement letter back from the IRS. Typically, each identity theft case takes 120 days to resolve, but often the process can involve more than six months and multiple correspondences from the IRS.
Reducing your risk for tax related identity theft is absolutely doable for everyone. One mandatory precaution is to always install security software with firewall and anti-virus protection (which most computers come with; it is also available for purchase at major electronics stores like Best Buy). Also, make sure you use secure and strong passwords on all your accounts and change them every sixty (60) days. Further, always safeguard your social security card and tax records in a secure place (do not carry that information around with you). Another “must do” is to avoid phishing emails, calls, and text messages. (Phishing is the act of sending emails as if you were someone you are not in order to get the person you are communicating with to give your personal information like account passwords or credit card numbers). These forms of communication are used by potential thieves, usually posing as a legitimate representative of an organization like your bank and credit card companies or even the IRS. If you receive a message with a link or downloadable attachment, do not open it unless you are sure that the person sending it is really who they claim to be. Remember, the IRS does not contact taxpayers by email or any other type of electronic communication such as text message nor will they ask for personal or financial information using these mediums. Another way to reduce your risk and make sure you are not being victimized is to monitor your credit report and review your Social Security Administration earnings statement once a year.
Now that you are equipped with the knowledge and tools, you can protect yourself, your business, and your family from tax related identity theft. But how do taxpayers stay on top of the latest trends with this nagging issue? They call their accounting firm for help! We at Mazur & Associates, Certified Public Accountants and Business Advisors are here to guide you should you feel you’ve become a victim of tax-related identity theft. We are available by telephone and email, so please call (732) 936-1230 or email firstname.lastname@example.org to immediately schedule an appointment!