Tax ID theft is when a criminal steals your social security number and uses it to file a tax return in order to fraudulently claim a tax return. Unfortunately, victims will usually only find out about the scam when it’s too late, and they are unable to file a tax return since one was already done with their SSN. In the past, the IRS has been slow to flag or notice tax fraud and unknowingly issued millions of refunds to thieves.
After ID theft surged for many years, new regulations have helped reduce the number of tax ID scams, causing the number of fraudulent filings in 2016 to drop by over 50%. This is due in part to information sharing between the IRS, state tax agencies, tax preparation and tax-filing software companies. Agencies are now looking for repeat use of the same IP address and other suspicious activity when returns are filed as a red flag for fraudulent behavior.
Some warning signs of tax ID Theft:
- Credit inquiry / new account on your credit report that you do not recognize and did not open.
- Debt collectors are calling about an existing account that you are unaware of.
- Your mail is missing; bank statements, W2’s, or other sensitive information that the sender claims was issued.
- IRS records indicate you received wages from an employer unknown to you.
- If after filing, you receive notice that a return has already been filed under your SSN.
Anyone can be a victim of tax-related ID Theft, whether you mailed your returns or submitted them on line.
If you think you may be a victim, it’s important to act fast. You should alert the credit reporting agencies and your financial institutions to stop thieves from opening new accounts. You should also contact the IRS Identity Protection Specialized Unit at 1-800-908-4490 and report the theft. Additional steps you should do are to place a fraud alert on your credit report account and monitor your credit. It’s also a smart idea to contact us with any questions or if you need assistance, we have helped many consumers who were victims of ID theft.
Protect yourself by submitting your tax return as early as possible and be wary of any email or phone correspondence from the IRS, collection agencies, or creditors. Never give out sensitive information without knowing who you’re speaking to first; the IRS will never contact you via email. Thief’s are always thinking of new ways to scam consumers and businesses, the best you can do is to monitor your credit, finances and personal information as well as staying informed of new scam alerts.
North Shore Advisory, Inc. offers a credit monitoring product which keep you in constant view of your credit allowing you to identify credit ID theft quickly.