Along with the start of tax season there has been a rampant rise in tax fraud. We have seen many tax payers coming to North Shore Advisory, Inc. for assistance with the issue. There are also those who are coming to us asking how to prevent tax identity theft. The IRS agrees that this scam has been on the rise, and are now calling it their “number 1 fraud”. In fact, in 2014 it jumped to the top consumer complaint with the FTC and made up 32% of all complaints they received. Sadly more than $5.2 billion in theft occurred with this scam in 2013, and that number is expected to keep rising.
What is tax-related ID theft?
The scam occurs when thieves use your stolen Social Security number to file a tax return claiming a fraudulent refund. 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. Often the IRS won’t realize a crime has been committed either, and will unknowingly issue a refund to the thieves.
People are susceptible to this scam whether they file their return online or by mail. There are multiple methods that thieves rely on to gain victims’ information. All thieves need for this scam is your Social Security number, name and date of birth. In some cases, thieves will impersonate the IRS (through phone or email) to get your info. Other methods include stealing W-2 forms right out of mailboxes, or using computer hacking to get the info.
Here are warning signs the IRS has shared:
Be alert to possible identity theft if you receive an IRS notice or letter that states that:
- More than one tax return was filed using your SSN.
- You owe additional tax, refund offset or have had collection actions taken against you for a year you did not file a tax return.
- IRS records indicate you received wages from an employer unknown to you.
Who is a potential victim?
- If you have been a victim of Identity theft where your Social Security number was used in an attempt to/or did open fraudulent accounts using your Social Security number.
- If you have mailed your tax return and received a notice in the mail that a return has already been filled under your SSN. If you e-filed, your return was rejected by the IRS.
What to do if you think you are a victim or may be:
- 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.
- The next step is to fill out Form 14039, the Identity Theft Affidavit with the IRS.
- Report identity theft at ftc.gov/complaint and file a report with law enforcement.
- 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.
Here are some steps to prevent the scam:
- Make sure that your computer has the most up-to-date anti-virus software, and that you have an up-to-date internet router (the current standard is WPA 2 encryption). Avoid using public WiFi.
- Send your return from the post office or another secure carrier. You should also always keep a lock on your mailbox.
- The IRS will never email you. If you do get a call from someone claiming to be the IRS (or a creditor/bank), you should always call them back directly to make sure it is actually them contacting you.
- We offer a credit monitoring product which keep you in constant view of your credit allowing you to identify credit ID theft quickly (see more info here).
- Submitting your tax return as early as possible is a deterrent for becoming a victim.
- Make sure personal info such as your SSN or passwords are not written down or stored anywhere (including your computer).
- The IRS offers a 6-digit pin to those who they identify as a victim of Identity theft or have been in the past. If you received a CP01A notice from the IRS you can file for the pin here. You can make a PIN that will be needed in addition to your other info for all tax filings. This is also available for anyone living in FL, GA, or DC, and should become available nationwide in the future.
Feel free to reach out to us if you have any credit questions or reports you would like reviewed!