Tax Identity Theft and Credit
The increasing popularity of filing tax returns online has given way to a rise in tax identity theft. According to data from the IRS, approximately $2.3 billion in consumer tax returns are stolen on an annual basis by identity thieves.
Tax identity theft occurs when a criminal files a person’s taxes fraudulently, claiming to be that person and receiving his or her tax return. When the individual whose identity was stolen attempts to actually file his or her taxes it is discovered that the return has already been processed and the money has been sent to someone else electronically.
All a fraudster needs to file a fraudulent return is a person’s social security number. They might also use other tax information to file the return, but it’s not necessary. They are able to file a fraudulent return using the consumer’s name and SSN, but their own address. They can then collect the refund check with the IRS usually being none the wiser a crime has occurred.
Most people have no idea they’ve been a victim of tax identity theft until they are unable to file their actual tax return for the year.
Preventing Tax Identity Theft
It’s impossible to completely eliminate the potential for tax identity theft to occur, but there are things that can be done that reduce the risk.
You should take usual, common sense measures with your social security number and card to avoid it being revealed to criminals. For instance, don’t carry your SSN card or anything that has the number on it with you. You should also avoid revealing our SSN to any individual or business unless absolutely necessary.
If you receive a phone call or email requesting personal information, refuse to share it unless you absolutely know who is contacting you and the reason for your request. Most legitimate reasons for requesting your SSN are handled in a matter that attempts to protect your information from criminals, so if something seems unusual it probably is.
You should also make an effort to secure your information as much as possible by using anti-virus software and firewalls on any devices where you post or enter personal information. Take time to shred or otherwise destroy any sensitive documents you no longer intend to keep in your personal files. And finally, make sure you are reviewing your credit card statements and credit report on a regular basis so you’re able to recognize fraudulent charges as soon as they appear.
How Do You Know You’ve Been a Victim of Tax Identity Theft?
Tax identity theft isn’t going to appear on your credit report or credit card statements as other fraudulent activity would.
The most obvious indication you’ve been a victim of tax identity theft is not being able to file your tax return because one has already been filed in your name. If you receive notification that you already filed a return and you did not, you need to take the appropriate action to notify the IRS and to file your actual return. Not filing a legitimate return can result in expensive penalties and fees.
Another indication that tax identity theft has occurred is if you receive notification of wages from an employer for whom you never worked.
If you’d like to learn more about tax identity theft, check out this information from the IRS.
One of the most devastating ways a person can learn about tax identity theft is because they face unwarranted IRS collection action against them. If you receive notice that the IRS is attempting to collect taxes from a year in which you did not file a return, there is a good chance you were a victim of tax identity theft. And while it might be tempting to ignore the notices from the IRS because they don’t seem legit, doing so can get you into trouble.
If you are being pursued by the IRS for a tax debt you believe is fraudulent or you’re facing other financial issues because of tax identity theft, we might be able to help. Contact the Law Office of Robert M. Geller at (813) 254-5696 for more information.