You may be wondering, “WHO could possibly want to steal my TAX identity?”
There’s a really good probability that nobody wants to pay your taxes for you.
But it is possible that someone obtained your Social Security number and filed a fraudulent return using YOUR identity, to steal your refund.
And this could happen online or offline. Are you taking steps to protect your identity?
Why Has This Become Such a Growing Problem?
As you work on your 2021 income tax returns, the IRS is still catching up from the 2020 tax year. Because of the COVID-19 pandemic and the problems it caused for all kinds of businesses and government agencies, there are reports that some individuals still haven’t received the 2020 refunds that they filed for during 2021.
In a “normal” year, that kind of delay would be cause for alarm, because there’s another reason why tax refunds can be late. The alarming reason is tax identity theft, and some crooked imposter deposited your refund money — or plans to, as soon as they get their clutches on it.
If that were to occur, you’d eventually get a letter from the IRS stating that your Social Security number was used to file a return that came in earlier. Other types of communications might alert you. So if you haven’t received your 2020 refund yet and haven’t received any suspicious messages, it’s more likely that it’s just delayed. But there are steps you can take to help avoid tax identity theft.
Take Precautions Online
You’ve probably heard about one of the scams that’s been going around. You get a phone call or an email stating that you’re seriously in arrears with your taxes and could even go to prison if you don’t pay up. You’re sometimes told that you need to purchase gift cards and read the numbers over the phone to settle your debt (which should be a big clue that it’s not at all about real tax issues!).
The IRS does not do this. They don’t make initial contact via email or phone calls. They ONLY send letters. So never respond to such a request. You can report such activity here, or send an email to firstname.lastname@example.org.
You can report fraudulent tax activity on this Treasury Department website.
Never click on a link in an attachment or provide sensitive personal information online or over the phone unless you initiated the interaction. Scammers have gotten very good at creating emails that look legitimate, even from the IRS. They’re also very good at convincing people that they’ll be in some kind of trouble if they don’t do what they’re asked.
There are other things you can do that seem like common sense, but many people don’t do them. That’s why scammers obtain many billions of dollars from individuals and businesses every year. So we recommend you:
- File early. Don’t give someone a chance to beat you to it.
- Adjust your withholding so you don’t get a large refund.
- Check out the security measures practiced by online tax preparation sites before you use them.
- Get an Identity Protection PIN, a 6-digit code issued by the IRS.
- Practice good computer hygiene. You know the drill. Create strong passwords. Use online security software. Subscribe to a reputable service that offers identity theft monitoring.
- Keep your computers and mobile phone updated. Use multi-factor authentication (MFA) when it’s offered.
Be Careful Offline, Too
The internet is not the only place your Social Security number and tax-related information live. There are risks in the real world, too.
Don’t carry your Social Security card—or anything with your Social Security number on it—in your wallet or purse. If you absolutely must supply your number to anyone but the IRS, make sure you know how it will be used and stored. Take outgoing mail to a USPS box or post office, and don’t leave incoming mail in your mailbox for any longer than you have to. If you’re ever around other people when you’re working on your taxes, like in a coffee shop or library, be aware of your surroundings so no one can look over your shoulder. And shred all financial papers that you don’t need anymore. Always shred.
Dealing with the Aftermath
If someone has used your Social Security number to file a fraudulent return, you may need to complete and submit an IRS Form 14039.
If the worst happens and you find that someone has absconded with your refund, there are several steps you should take, including:
- Answer the IRS letter immediately. Call the phone number provided.
- Complete an IRS Form 14039.
- Get in touch with law enforcement. What the thief did was a crime.
- Report the fraud on a specialized FTC website.
- Have a fraud alert placed on your credit records. Contact Equifax, Experian, and TransUnion. If the person who did this to you used your Social Security number with the IRS, they may have also tried to apply for credit cards in your name, or other scams.
- Make your bank(s) aware of the situation.
You can also contact us at Baum CPA. We want to know if your tax information has been compromised, and we can help represent you to the IRS, or even take care of all of the calling and contacting and problem resolution. Or, we can help you prepare for income taxes year-round so that when the filing season opens, you’ll be ready to file early. That’s a wise practice whether or not you’ve been the victim of identity theft. Or we can do both! Your tax identity peace of mind starts with a single click here to book a free consultation with Baum CPA!
This blog and its authors provide this content strictly for informational purposes. No content herein should be misconstrued as financial advice. Everyone’s specific circumstances vary — Always consult with a qualified, licensed financial advisor, legal counsel, and tax professional before venturing into any investment or business activities.