Identity Theft and Your Taxes

ID fraud

Tax-related identity theft is a growing problem in the United States. Millions of people every year are being affected by fraudulent activity under their Social Security Number (SSN). As a matter of fact, the Consumer Sentinel Network (CSN) received nearly 2.6 million consumer complaints in 2014 and scams involving government documents such as fraudulent tax filings were the most common method of identity theft. Thieves are taking advantage of the technological advancements made in filing your taxes by illegally obtaining SSNs and using them to file fraudulent tax returns and claiming the reimbursements.

According to the Journal of Accountancy (JoA) article, Majority of CPAs polled had clients victimized by tax ID theft this year, written by Paul Bonner, there have been a staggering amount of tax-related identity theft cases. Out of all of the CPAs who answered the 2015 tax software survey, 63% said at least one of their clients was a victim of identity theft. According to Forbes.com, the IRS paid a total of $5.8 billion in fraudulent refunds from 2011 to 2014.

When filing your tax return, there are a few things to keep an eye out for that could possibly signal fraudulent activity under your SSN. If an alert from the Internal Revenue Service (IRS) indicates that more than one tax return was filed under your SSN, you owe additional tax, or that you have received wages from an employer unknown to you, you may be the victim of tax-related identity theft. If a situation occurs where you believe you are the victim of identity theft, contact the IRS immediately. Their Identity Theft Hotline is 800/908-4490.

Tips to protect yourself from becoming a victim of identity theft:

–  Don’t carry your Social Security card or any documents with your SSN or Individual Taxpayer Identification Number (ITIN) on it.
– Only give a business your SSN or ITIN when it is asked for.
– Make sure your financial information is protected.
– Check your credit report annually.
– Secure personal information in your home and protect against unlawful access to your home computers by using effective security software.
– Don’t give personal information over the phone, through mail, or on the web unless you know exactly who you are dealing with or you initiated the communication.

If you believe you have been the victim of fraudulent activity, follow these steps:
– File a report with law enforcement
– Report identity theft at ftc.gov/complaint and learn how to respond to it at identitytheft.gov
– Place a fraud alert on one of the three major credit bureaus (Equifax, Experian, TransUnion)
– Contact your financial institutions and close any accounts that were opened without your permission

If you know for certain you are a victim of tax-related identity theft, follow these additional steps:
– Respond promptly to any IRS notice
– Complete the IRS form 14039 (Identity Theft Affidavit)
– Continue to pay your taxes and file your tax return, even if it has to be done on paper

This is not something that happens to “someone else” in “some other place.” The issue of identity theft is so significant in Tennessee that the Tennessee Department of Safety and Homeland Security created a special unit focused on this criminal activity. And, they prepared a special resource kit for those who have been victimized.

Here is a link to that information:
Resource Kit for Victims of Identity Theft

If you would like support with your corporate or personal tax situation, please contact Price CPAs at 615/386-0686. We will gladly work with you to help address and possibly improve your tax position based on our history and expertise in this important area – that affects everyone.