Can you imagine filing your taxes and finding out someone has already done it for you? It might sound like a dream, but really, it could be the beginning of a nightmare. Thousands of people experience tax-related identity theft each year, a scam where someone uses your personal information to file a fraudulent tax-return and pocket your refund.
This week, January 28th to February 1st, 2020, is National Tax-Related Identity Theft Awareness Week. Here at the Lone Star Advocate, we’re helping you learn about this vicious and costly form of identity theft. How does Tax ID theft work and how can you protect yourself? Keep on reading.
How Tax-Related Identity Theft Happens
Tax-Related Identity Theft happens when someone who has access to your social security number uses it or sells it to someone who uses it to file a tax return or get a job. These slick ID thieves are all over the place – hospital employees, military personnel, tax preparers, collections agency employees, internet installers, prison employees, loan processors and even IRS employees themselves. Tax identity theft can also happen when someone steals information during a data breach.
Once they have your information, thieves file a fraudulent return on your behalf in order to get a refund.
How Do You Know If You’re a Victim of Tax-Related Identity Theft?
The IRS cites several warning signs for Tax ID theft, such as:
- You get a notice from the IRS that more than one tax return was filed in your name.
- You are unable to e-file your return because it has already been filed.
- You receive a paycheck or a W-4 from an employer you don’t know.
- The IRS sends you a notice that you failed to report income.
Keep in mind that any notification from the IRS will come by mail. The IRS doesn’t reach out to consumers with a email, text or social media message asking for personal or financial information. If you get an email that claims to be from the IRS, do not reply or click on any links. Instead, forward it to firstname.lastname@example.org.
What To Do If You’re a Victim of Tax-Related Identity Theft
If you think you’ve been the victim of tax-related identity theft, contact the IRS immediately. You can call the IRS’ new tax ID theft hotline at 1-877-438-4338.. You will be required to file an identity theft affidavit with proof of your identity. Respond immediately to any communications from the IRS.
Because identity thieves may use your information to scam you in multiple ways, take other precautions too. You’ll want to file an identity theft complaint with the Federal Trade Commission, contact the 3 major credit bureaus and notify your financial institutions.
How To Protect Yourself From Tax-Related Identity Theft
The IRS recommends these measures to help prevent becoming a victim of tax-related identity theft:
- Always use security software with firewall and anti-virus protections. Use strong passwords.
- When you file, make sure you use a secure internet connection or mail your tax return directly from the post office. This makes it more difficult for thieves to get their hands on your personal information.
- Learn to recognize and avoid phishing emails, threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card companies and even the IRS.
- Do not click on links or download attachments from unknown or suspicious emails.
- Protect your personal data. Don’t routinely carry your Social Security card or Medicaid card, and make sure your tax records are secure.
- Shred old taxes returns you’re no longer required to keep, as well as draft returns, extra copies, and calculation sheets.
The Better Business Bureau also advises filing your tax return early to keep thieves from getting there first.
But no matter how careful you are with your personal information, tax-related identity theft can happen, so it’s important to notice and respond to any warning signs.
Learn To Spot IRS Imposters
Tax scammers posing as the IRS may call you and say you owe taxes, and threaten to arrest you if you don’t pay with a prepaid debit cards or credit card. They might know some information about you, and they can rig caller ID to make it look like the IRS is calling. But the IRS won’t ask you to pay with prepaid debit cards or wire transfers and won’t ask for a credit card number over the phone. If the IRS needs to contact you, they will first do it by mail. If you have any doubts, call the IRS directly.
Get Identity Theft Protection
If you’re concerned about identity theft, consider a service to monitor your identity and help you if you become a victim. Texas Legal’s premium independent and group plans include identity theft monitoring and protection from Experian. As a Texas Legal member, you’ll have access to legal help whenever you need it. You also get the Experian team dedicated to protecting your identity, all for a low-monthly premium.
Tax-Related Identity Theft May Delay Refunds
Even if you’re not a victim of tax ID theft, you may experience one of the negative consequences: slower refunds. Because of the enormous rise in tax ID theft cases, most states are taking much longer to process refunds, whether taxes are filed online or on paper. Expect longer delays as state and federal tax employees work to stop identity thieves from stealing refunds and causing trouble.
For more on tax-related identity theft, visit the FTC’s consumer identity theft protection site and the IRS’ Taxpayer Guide to Identity Theft.