The Internal Revenue Service (IRS) estimates tax refund fraud will near $21 billion in 2016. To counteract rising threat, the IRS has put on a full court press to stop identity theft, using a combination of prevention, detection and victim assistance. The “Taxes. Security. Together.” awareness campaign is an effort to better inform taxpayers about the need to protect their personal, tax and financial data online and at home.
Cybercriminals who acquire a taxpayer’s Social Security number may attempt to file a tax return claiming a fraudulent refund. In many cases, the unsuspecting taxpayer is unaware of the situation until they try to file their own, legitimate tax return. Then it can be a difficult process to sort through the confusion.
The IRS has issued the following seven tips for prevent tax fraud due to identity theft.
- Protect Your Records. Keep your Social Security card at home and not in your wallet or purse. Only provide your Social Security number if it’s absolutely necessary. Protect your personal information at home and protect your computers with anti-spam and anti-virus software. Routinely change passwords for internet accounts.
- Don’t Fall for Scams. Criminals often try to impersonate your bank, your credit card company, even the IRS in order to steal your personal data. Learn to recognize and avoid those fake emails and texts. Also, the IRS will not call you threatening a lawsuit, arrest or to demand an immediate tax payment. Normal correspondence is a letter in the mail. Beware of threatening phone calls from someone claiming to be from the IRS.
- Report Tax-Related ID Theft to the IRS. 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; 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;
- IRS Letters. If the IRS identifies a suspicious tax return with your Social Security Number (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 PIN. If you are a confirmed ID theft victim, the IRS may issue an IP PIN. The IP PIN is a unique six-digit number that you will use to e-file your tax return. Each year, you will receive an IRS letter with a new IP PIN.
- Report Suspicious Activity. If you suspect or know of an individual or business that is committing tax fraud, you can visit gov and follow the chart on How to Report Suspected Tax Fraud Activity.
- Combating ID Theft. 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.
More information about tax-related identity theft is available online. There is a special section on IRS.gov devoted to identity theft and a phone number available for victims to obtain assistance.
If you have questions about identity theft or other tax issues, please contact the Gray, Gray & Gray Tax Department at (781) 407-0300.