Now that tax season is underway, it’s a good time for taxpayers to educate themselves about identity theft.
One type of identity theft occurs early in the tax filing season, when thieves file tax returns with stolen Social Security numbers in order to obtain refunds.
The IRS and the U.S. Department of Justice took action on this issue just last month, bringing enforcement actions in Miami, Fort Lauderdale, Port St. Lucie, Ocala, Tallahassee, Fort Myers, and Pensacola. As a result, in Miami, owners of a check cashing store were charged with conspiracy in connection with an IRS tax refund check cashing scheme; in Pensacola, five were indicted for a fraudulent prisoner income tax refund scheme; and in Tallahassee, nine defendants were indicted in a tax refund scheme.
How does this type of identity theft work?
Identity theft occurs when someone uses another’s personal information without permission to commit fraud or other crimes using the victim’s name, Social Security number or other identifying information.
Usually these types of thieves use a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.
However, as a taxpayer, you may not realize you are a victim until you receive a letter from IRS stating that more than one tax return was filed with your information, that you have a balance due, or that IRS records show wages from an employer that you have never worked for!
How does a legitimate taxpayer reduce the risk of identity theft?
First, you should know that the IRS does not initiate contact with taxpayers by email to request personal or financial information. This means that the IRS will not attempt to initiate contact with a taxpayer using text messages and social media channels. A taxpayer can report such suspicious emails, text messages or social media messages to [email protected] or by phone at 1-800-366-4484.
Next, you should follow these tips, which are recommended by the IRS to reduce your risk:
- Don’t carry your Social Security card or any document(s) with your SSN on it.
- Don’t give a business your SSN just because they ask. Give it only when required.
- Protect your financial information.
- Check your credit report every 12 months.
- Secure personal information in your home.
- Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts.
- Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.
Did you know? Department of Justice attorneys have cautioned that people often make the mistake of providing their SSNs to doctor’s offices and other medical facilities. Providing this type of information is not necessarily required and can increase a person’s risk of identity theft.
Carefully select a reputable professional to prepare your return
Recently, a tax preparer was sentenced to 18 months in prison and ordered to pay $784,000 in restitution for filing fraudulent tax returns, identity theft and unauthorized use of another person’s Social Security number. The return preparer conducted a fraudulent tax filing scheme in which false employer earnings statements were submitted in support of tax returns for various individuals, some of whom were unaware that their personal information was being used to file and obtain tax refunds. The preparer’s scheme generated several hundred thousands of dollars in fraudulent refunds. The scheme was discovered after the preparer’s employer conducted an audit, noticed suspicious transactions and reported the findings to the IRS.
What does a taxpayer who is a victim of identity theft need to do?
If you do receive a notice from the IRS, open the letter. Interestingly, many people who receive mail from the IRS do not open these letters because they are immediately struck by panic and fear.
Next, you need to respond immediately to the name and number provided in the IRS letter. You may also need to complete Form 14039, the IRS Identity Theft Affidavit.
There is also a special IRS unit, the IRS Identity Protection Specialized unit that a taxpayer can contact at 1-800-908-4490.
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For more information please contact author Lu-Ann Dominguez
Read the original alert on Gunster.com: Tax refund fraud and identity theft become high priorities as tax season approaches
