Identity Theft & Your Taxes
identity theft occurs when someone uses your stolen Social
Security number to file a tax return claiming a fraudulent
refund. It presents challenges to individuals, businesses,
organizations and government agencies, including the IRS.
Learning that you are a victim of
identity theft can be a stressful event and you may not be
aware that someone has stolen your identity. In many cases,
the IRS may be the first to let you know you're a victim of ID
theft after you try to file your taxes.
The IRS is working hard to stop identity theft using a
strategy of prevention, detection, and victim assistance. In
2015, the IRS stopped 1.4 million confirmed ID theft returns
and protected $8.7 billion. In the past couple of years, more
than 2,000 people have been convicted of filing fraudulent ID
theft returns. And, in 2014, the IRS stopped more than $15
billion of fraudulent refunds, including those related to
identity theft. Additionally, as the IRS improves its
processing filters, the agency has also been able to halt more
suspicious returns before they are processed.
Here's what you should know about identity theft:
Protect your Records. Do not carry your Social
Security card or other documents with your SSN on them. Only
provide your SSN (social Security Number) if it's necessary
and you know the person requesting it. Protect your personal
information at home and protect your computers with anti-spam
and anti-virus software. Routinely change passwords for all of
your Internet accounts.
Don't Fall for Scams. Criminals often try to
impersonate your bank, credit card company, and even the IRS
in order to steal your personal data. Learn to recognize and
avoid those fake emails and texts.
Beware of Threatening Phone Calls. Correspondence
from the IRS is always in the form of a letter in the mail.
The IRS will not call you threatening a lawsuit, arrest, or to
demand an immediate tax payment using a prepaid debit card,
gift card, or wire transfer.
As schools around the nation re-open, it is important for
taxpayers to be particularly aware of a new scam going after
students and parents. In this latest scheme, telephone
scammers have been targeting students and parents and
demanding payments for non-existent taxes, such as the
"Federal Student Tax."
People should be on the lookout for IRS impersonators calling
students and demanding that they wire money immediately to pay
a fake "federal student tax." If the person does not comply,
the scammer becomes aggressive and threatens to report the
student to the police to be arrested.
Report ID Theft to Law Enforcement. If you cannot
e-file your return because a tax return already was filed
using your SSN, consider the following steps:
> File your taxes by paper and pay any taxes owed.
> File an IRS Form 14039 Identity Theft Affidavit. Print the
form and mail or fax it according to the instructions. You may
include it with your paper return.
> File a report with the Federal Trade Commission using the
FTC Complaint Assistant.
> Contact one of the three credit bureaus so they can place a
fraud alert or credit freeze on your account.
Complete an IRS Form 14039 Identity Theft Affidavit.
Once you've filed a police report, file an IRS Form
14039 Identity Theft Affidavit (see below). Print the form and
mail or fax it according to the instructions. Continue to pay
your taxes and file your tax return, even if you must do so by
filing on paper.
IRS Notices and Letters. If the IRS identifies a
suspicious tax return with your SSN, it may send you a letter
asking you to verify your identity by calling a special number
or visiting a Taxpayer Assistance Center. This is to protect
you from tax-related identity theft.
IP PINs. If a taxpayer reports that they are a
victim of ID theft or the IRS identifies a taxpayer as being a
victim, he or she will be issued an IP PIN. The IP PIN is a
unique six-digit number that a victim of ID theft uses to file
a tax return. Each year, you will receive an IRS letter with a
new IP PIN.
Data Breaches. If you learn about a data breach
that may have compromised your personal information, keep in
mind that not every data breach results in identity theft.
Furthermore, not every identity theft case involves taxes.
Make sure you know what kind of information has been stolen so
you can take the appropriate steps before contacting the IRS.
Report Suspicious Activity. If you suspect or know
of an individual or business that is committing tax fraud, you
can report it on the IRS.gov website.
IRS Options. Information about tax-related identity
theft is available online at IRS.gov. The IRS has a special
section on IRS.gov devoted to identity theft and a phone
number available for victims to obtain assistance.
If you have any questions about debt and related issues, don't hesitate to call the office. Help is just a phone call away at
you can call our offices if you have any questions about these
or any other accounting, tax, financial planning or insurance
related issues, at (480) 641-8100.
Regards, Nathan DeBacker, CPA
CFO Financial Services LLC