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Tips to Prevent Tax Identity Theft

As April 15th approaches, it is time once again to begin preparing our income taxes. Not a task many of us relish, now we need to be extra vigilant about safeguarding our personal information against tax-related identity theft.

Identity thieves use stolen Social Security Numbers (SSN) to file a tax return and claim a fraudulent refund. These falsified returns are typically filed very early on, upping the odds of a successful ‘scam.’ The actual owner of the SSN may only discover their identity has been compromised when they file their return closer to the April 15th deadline and learn that one has already been submitted. A 2017 study by Javelin Strategy & Research Center found that 13.1 million people in the United States have been victimized by this white-collar crime. Because of this, the IRS has a heightened awareness and earmarks suspicious returns, notifying the potential victim in writing.

Identity thieves obtain your SSN in a variety of ways, including sifting through garbage or recycling bins, phishing or SMiShing—sending emails or text messages asking for personal information or directing recipients to bogus websites, and calling you directly to have you verify information to verify an account or award you a prize. The IRS will NEVER send an email or text requesting personal information or financial details.

How to Safeguard Your Identity

  1. File your tax return early
  2. Keep your SSN in a safe place-never in your wallet
  3. Use secure Internet connections (avoid public WiFi hotspots), strong passwords, and enable two-step verification where possible
  4. Never give any personal information over the phone, especially to people who have called you
  5. Be wary of emails and text scams – do not respond or click on links provided
  6. Lock your mailbox or use a PO Box
  7. Monitor your bank and credit card accounts frequently
  8. Check your credit report at least once per year, preferably once every four months
  9. Respond immediately to any correspondence from the IRS

Be Alert for These Warning Signs

  1. Multiple tax returns were filed using your SSN
  2. IRS records indicate you received wages from an employer for whom you’ve never worked
  3. You owe taxes or have collection actions against you for a year in which you did not file a tax return

If you become a victim of tax identity theft, immediately file a complaint with the federal Trade Commission (FTC) at identitytheft.gov. Contact each of your financial institutions to close out and accounts opened without your permission as well as those corrupted with by identity thieves.

It is also critical to contact one of the three credit bureaus to place a fraud alert on your credit records.

The IRS recommends completing the Identity Theft Affidavit form 14039 if you are certain or suspect you are a victim of tax-related identity theft. They also request that you report any suspicious activity directly to the IRS. Email or online scams should be reported to phishing@irs.gov; for phone, fax, or mail scams, call 800-366-4484.

For more information about protecting your identity, how to detect if your identity has been compromised, and what to do if you become a victim, click here.

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