Be on the Lookout!!!
In May, the Internal
Revenue Service announced the agency had fallen victim to a security breach
that resulted in more than 100,000 taxpayer transcripts falling into the hands
of criminals. Additionally, in 2014 the FTC reported that tax-related
identity theft was the highest ranking form of identity theft complaints reported to
them. The statistics are staggering! In 2013 the FTC received 2,545
complaints of IRS imposter scams, whereas in 2014, the number jumped to
54,690. The total number of tax-related claims was 109,063, accounting
for 32.8% of all the identity-theft related claims made in that calendar
What can you do to
The two most common scams typically involve taxpayers receiving calls from
people pretending to be with the IRS to gain information, or by someone filing
a false tax return using stolen taxpayer data to collect fraudulent
refunds. The best way to protect yourself against identity theft is to be
informed about the types of scams that are being reported and to file your tax
return early. The scammers will typically call and threaten to arrest you,
suspend your license, or seek legal action if you don’t pay them immediately.
And, believe me, they are convincing! They even have numbers that show up
on caller ID with a Washington D.C. area code and many times have personal
information about you. The IRS only contacts
taxpayers by U.S. mail and will provide you with a reference number and
instructions on how to contact the agency regarding any deficiency. Do
not provide financial information to someone who calls on the phone without
calling your accountant first.
Another way to
protect yourself is to file your tax return as early as you can.
Remember, you have until April 15th to pay your tax regardless
of when you file your return. Most fraudulent tax returns are filed in
late February or early March. By filing your tax return early, it greatly
reduces the chances that someone else will file a fraudulent one before you
file your tax return. Most people find out a fake tax return had
been filed under their social security number when they try to electronically
file their return. If this happens, the following steps should be taken
to notify the government to start an investigation:
· Complete form
14039 Identity Theft Affidavit and attach it to your tax return.
· Complete your state’s
identity theft form.
· File a report with your
local police department.
· File a complaint with
· Place your identity on a
fraud alert with the major credit reporting agencies.
· Contact your banks and
credit card companies.
One last note, if
your identity is stolen outside of a tax-related event it is prudent to notify
the IRS by following the steps listed above to prevent a tax-related
breach. The IRS will issue an Identity Protection Personal Identification
Number (IP PIN) to be used when filing a tax return to ensure you are who you
say you are. This may seem redundant but many times a credit card
identity theft event can be a precursor to a fraudulent tax return being
There is no way to
completely eliminate the risk of becoming a victim. However, simply being aware
of the scams and knowing how to react is a valuable step towards protecting