Q & A: Tax Identity Theft

Tax identity theft has become a very profitable payday for cyberthieves – a multibillion-dollar payday. Consider this: In 2015, the Internal Revenue Service (IRS) rejected or suspended the processing of more than 4.8 million suspicious tax returns. Of that number, more than 1.4 million were confirmed tax identity theft returns, which totaled over $8 billion, the IRS reported. So it is easy to see why tax-related identity theft remains one of the IRS’s “Dirty Dozen” top tax scams.

To highlight that tax identity theft is very real and present danger, the Federal Trade Commission has designated January 29 to February 2, 2018, as Tax Identity Theft Awareness Week.

ScoreSense® has developed a Tax Identity Theft Q&A to help you stay informed and protected:

Q: What is tax identity theft?
A: Tax identity theft happens when someone uses your social security number (SSN) and other personal information to file a fraudulent tax return in order to steal a tax refund.

Q: What are the warning signs that someone is attempting to commit tax identity theft in your name?
A: Here are the red flags to watch for:

  • You get an email or call from the IRS requesting your financial or personal information. The IRS will never do this – they will always send a letter. This is a phishing expedition by identity thieves.
  • IRS records show you received wages from an employer you have not worked for.

Q: What are the signs that you have been a victim of tax identity theft?
A: If any of the actions below occur, you are likely a victim:

  • You try to electronically file your tax return and find that a return has already been filed using your SSN.
  • You get a letter from the IRS indicating more than one return has been filed in your name.
  • You owe additional tax, have had a refund offset, or have collections against you for a year you didn’t file.
  • Your state or federal benefits were reduced or cancelled because the agency received information reporting an income change.

Q: How long does it take to investigate tax identity theft?
A: A typical case can take about 180 days to resolve, but some reports have put the time at an average of 278 days. The IRS is working on recommendations to reduce this time period. While the identity theft cases are being worked, the IRS also reminds victims that they need to continue to file their tax returns during this period.

Q: What steps can I take to protect myself?
A: First and foremost, file your tax return as early as possible. This will help you get your tax refund before tax identity thieves can beat you to it! Also:

  • Check your credit reports monthly for identity theft, specifically accounts, employers and addresses that are not familiar.
  • When filing your taxes electronically, be sure you use a secure Internet connection (not from the local coffee shop).
  • If you file the old-school way, mail your tax return directly from the post office (preferably via Certified Mail to enable tracking) to prevent thieves from stealing it from your mailbox.
  • Only share your social security number when required; ask why it’s needed and how it will be protected.
  • Don’t give personal information over the phone, email or mail unless you know who you are dealing with.
  • Don’t give thieves riches in your trash. Shred old tax returns and documents you are no longer required to keep (generally after three years if not audited).

Q: What should I do if I suspect tax identity theft? 
A: Don’t delay! Early detection is critical to minimizing the damage.

  • If you get an IRS notice in the mail, respond immediately by calling the number provided in the letter.
  • If your electronically filed tax return is rejected because a duplicate has already been filed using your SSN, or the IRS instructs you, submit IRS Form 14039: Identity Theft Affidavit.
  • If you did not get a notice from the IRS but think you are a victim of identity theft, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490 immediately.

Identity theft and tax fraud go hand in hand. Be mindful that last September’s Equifax data breach – which exposed the social security numbers and other key personal data of 143 million Americans – has given hackers a wealth of information that may let them attempt fraudulent tax return filings for years to come.

Use tax season as your reason to start monitoring your credit reports and other personal data. Your sensitive personal information commands a high price on the black market, and once your personal data is stolen, it can take many years to resolve, especially if the theft is not detected early.

What to learn more about tax identity theft, here is a list events being held during the FTC’s awareness week:

Jan 29 ―  To highlight that tax identity theft is a very real and present danger, the FTC has designated this week as Tax Identity Theft Awareness Week. Learn how you can participate in the webinars and chats that kick off today at 2 p.m. EST: https://www.consumer.ftc.gov/features/feature-0029-tax-identity-theft-awareness-week

Jan 30 ―  The FTC is partnering with several organizations to host a webinar at 2:30 p.m. EST today on how tax identity theft and IRS imposter scams occur, how to avoid them, recovery steps for victims, and free resources in your community. Learn more here: https://www.ftc.gov/news-events/events-calendar/2018/01/free-tax-identity-theft-awareness-week-webinar-ftc-aarp

Jan 31 ―  The FTC and the Department of Veterans Affairs will co-host a Twitter chat at 11 a.m. EST today for service members, veterans and their families to examine how to minimize the risk of tax identity theft, and what to do if it happens. For more information: https://www.ftc.gov/news-events/events-calendar/2018/01/tax-identity-theft-week-twitter-chat-service-members-veterans

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