Recently the Federal Trade Commission reported that government documents/benefits is the most common form of reported identity theft. As a tax practitioner, identity theft continues to be an ever increasing problem for my clients.
First of all the question is asked: What is identity theft? Identity theft occurs when someone uses your personal information such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes. These crimes are serious! If you become a victim of identity theft you can spend months or possibly years (and your hard earned money) repairing the mess these thieves have made of your good name, your credit record, your tax information, and your refund.
Usually an identity thief uses a legitimate taxpayer’s identity to fraudulently file (E-File) a tax return and claim a refund early in the filing season. You may be unaware that this has happened until you file your tax return later in the filing season and you will get a notice that two returns have been filed using the same SSN. Thus innocent taxpayers are victimized because their refunds are delayed.
If you or your tax professional receives a notice from the IRS that your tax records may have been compromised, respond immediately to the name and/ or number printed on the notice or letter. You will have to fill out IRS Identity Theft Affidavit Form 14039. In addition the IRS will issue a six- digit identity protection (IP) PIN number that must be used when filing your tax return. IP PIN’s are valid for only one year. A new number is issued every year for three years after the identity theft incident.
Here are some tips to help you protect yourself from becoming a victim of identity theft:
• Don’t give a business your SSN or ITIN just because they ask. Give it only when required and you know who is asking for the information.
• Protect your financial information.
• Check your credit report every 12 months. • Secure personal information in your home.
• Protect your personal computers by using firewalls, antispam/ virus software, update security patches and change passwords for internet accounts.
• Remember the IRS does not initiate contact with taxpayers by email to request financial information. This includes any type of electronic communication such as text messages or social media.
• If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, you may consider contacting the IRS Identity Protection Specialized Unit. In my practice I have seen where identity theft cases are extremely complex to resolve, frequently touching on multiple issues and multiple tax years. It seems that we must remain vigilant to guard our personal information.