by Jennie D. Biggs, Tax Manager
If you have experienced identity theft, you know how devastating it can be. Unfortunately, it’s on the rise, so it behooves us all to pay attention to prevention methods, as no one is immune. The month of January is a high activity period for such scams since thieves rush to file false tax returns using your social security number before you have a chance to do so.
In this article, I will focus on how to best protect the single most valuable piece of information—your social security number (SSN). Virtually any business establishment or institution that requests your social security number puts you at risk, yet most people give it out with not a second thought. This can especially be the case when innocently providing confidential information to a doctor’s office or another healthcare provider. Unfortunately, these thefts are often an “inside” job.
We all need to do our part to prevent and report identity theft. Keep the following ten points in mind during this holiday season, and hopefully, it will help keep the Grinch away from your ID (and the tax refund you deserve)!
Beware of threatening phone calls from someone claiming to be from the IRS. The IRS will not call you to demand immediate payment, nor will they call about taxes owed without first mailing you a bill. If you have no reason to believe you owe taxes, then it’s probably a scam. Report the phone call incident immediately to the Treasury Inspector General for Tax Administration.
If your SSN has been compromised and you think you might be the victim of identity theft, file a police report as soon as possible. You can also file a report with the Federal Trade Commission (FTC), using the online FTC Complaint Assistant, which has a special complaint category for “Identity Theft.”
If you believe you are a victim of tax-related identify theft, fill out the IRS Form 14039 - Identity Theft Affidavit and mail or fax it according to the instructions. Click here for a downloadable PDF of this form. Continue to pay your taxes and file your tax return, even if you must do so by paper, being sure to include your IP PIN (see #6 below).
The IRS may actually learn about a scam before you realize it and send you a notice. First thing, take a deep breath. IRS notices can seem scary and intimidating if you aren’t used to seeing them every day. Weinstein Spira provides a great service by explaining the notice and working to help resolve the issue.
If a taxpayer reports that they are a victim of ID theft, or the IRS identifies a taxpayer as being a victim, they will be issued an identity protection personal identification number (IP PIN). This is a unique, 6-digit number that a victim of ID theft must use to file their tax return from then on. Note: Form 14039 must be filed to receive an IP PIN (see #4 above).
If you learn about a data breach that may affect your personal information, keep in mind that not every data breach results in identity theft. And certainly, not every identity theft case involves taxes. Be sure you know what kind of information has been stolen before contacting the IRS. This makes sense, as the IRS is so short-staffed and they don’t want every Target or Home Depot cardholder calling!
Even if you don’t have proof, it’s important to report any suspicious activity pertaining to identity theft and tax fraud. Such early intervention may be enough to stop (or catch) the thief. To report an individual or business committing tax fraud, visit www.irs.gov, and follow the “If…Then” chart on How to Report Suspected Tax Fraud Activity.
The IRS and law enforcement really want you to know that they’re cracking down on the offenders! Over the past few years, nearly 2,000 people were convicted in connection with a phony income tax refund. The average prison sentence has grown from 3 years to 3-½ years, and the longest sentence is 27 years! They’re also trying to stop the fraud before refunds are out the door, and in recent years have been able to stop more than $15 billion of fraudulent refunds per annum.
For more information, visit the special section on the www.irs.gov website—Identity Protection: Prevention, Detection and Victim Assistance—which is devoted to helping victims of identity theft.
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