Highlights

  • What Exactly Is It?
  • How Will I Know if I am a Victim?
  • What Do I Do Now?
  • Prevent Identity Theft BEFORE it Happens

What Exactly Is It?

Ok, so we have all heard of identity theft—someone steals your personal information and “pretends to be you”. With the increase in technology use and with electronic transactions on the rise, all of us are at risk to become victims.  Identity theft in relation to tax fraud is when someone uses your social security number file a fraudulent tax return. This of course is illegal, but many people fall prey to it and have no idea it has occurred until too late.

How Will I Know if I am a Victim?

There are many “red flags” that you should be in tune to when it comes to spotting identity theft.  One major red flag is if the IRS notifies you or your accountant that more than one return was filed using your social security number. Another major warning is that the IRS states that you received wages from an employer whom with you have not been employed or received a larger sum of wages than you actually did according to your W2.

What Do I Do Now?

There are several steps you should take once you have reason to believe you have become a victim of identity theft according to the Federal Trade Commission (FTC). First of all, you should close all credit cards and accounts that have been used by the perpetrator. Secondly, you should contact the FTC and file a complaint. Thirdly, you should contact a major credit bureau (such as Equifax) and have them to place a “fraud alert” on your credit records.  The IRS recommends additional steps to be taken if you KNOW your social security number has been compromised or you have been a victim of tax identity theft. The IRS recommends that you complete Form 14039 (Identity Theft Affidavit) if your electronically filed return is rejected because of another filing under the same social security number.

Prevent Identity Theft BEFORE it Happens

So enough of the doom and gloom—how can you be proactive and prevent the problem before it even occurs? There are many “steps” you can take to reduce your risk. Some may seem pretty common sense, but they can significantly influence whether or not you become a victim. First of all, make sure you are using safe software and anti-virus programs. Also make sure that you use strong passwords to help protect all of your information. Secondly, learn to recognize fraud schemes. Some schemes are email based, while others involve phone calls trying to scam victims. The IRS will NEVER initiate contact with taxpayers by email, text, or social media to request additional personal or financial information. If you receive any such email or text message, DO NOT RESPOND—YOU ARE BEING SCAMMED! Immediately forward this email to phishing@irs.gov.  Also beware of other phone calls and emails from establishments that claim to be your bank or credit card company and seek personal information. Thirdly, do not click any links or attachments in emails for which you do not know the sender. Finally, limit the amount of personal information you regularly carry, such as security cards. Instead, keep these documents and other important tax information in a secure location.

By taking all of these precautions, you can significantly reduce your risk of falling prey to identity thieves. However, if you should find yourself in this terrible situation, Wealth Builders CPAs can help! Please contact our office so we can help you navigate the steps you should take to secure your identity and protect your personal information!

 

 

“Tips for Taxpayers, Victims about Identity Theft and Tax Returns.” IRS, 6 June 2016, www.irs.gov/uac/newsroom/tips-for-taxpayers-victims-about-identity-theft-and-tax-returns. Accessed 21 August 2017.

“Taxpayer Guide to Identity Theft.” IRS. 18 April, 2017, www.irs.gov/uac/taxpayer-guide-to-identity-theft. Accessed 21 August 2017.