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Watch Out for Tax-Related Identity Theft

Identity theft is of particular concern during tax season, when thieves use stolen Social Security numbers to file fraudulent tax returns and claim refunds. Unfortunately, if this happens to you, you likely won’t know it until you file your tax return. The IRS will deny your return if someone has already filed one in your name. You’ll find out immediately if you file online, or in writing if you file by mail. Filing your taxes as early as possible can help reduce the chances of someone else filing a return in your name.

What should you do if you become a victim of this fraud? The first step is to alert the IRS. Complete an IRS Identity Theft Affidavit (Form 14039), attach it to your paper return, and mail it to the IRS according to instructions. The IRS recommends that you continue to pay your taxes and file your tax return, even if you must do so by paper.

To protect yourself and prevent your personal information from being used to commit other crimes, be sure to take some additional steps. Contact one of the three major credit reporting bureaus – Equifax, Experian, or TransUnion – to place a fraud alert on your credit records, and file a complaint with the Federal Trade Commission at identitytheft.gov.

How can you avoid becoming a victim?

  • First, protect your Social Security number. It’s your most important piece of personally identifiable information. Keep your Social Security card in a secure place (not in your wallet). Give out your Social Security number only when absolutely necessary. Destroy any documents you no longer need that contain your Social Security number or other personal data.

  • Be mindful when using technology. Don’t open attachments in e-mails unless you know who sent it and what it is. Use security software and strong passwords. Only transmit personal information over secure networks (not public Wi-Fi) through encrypted websites (those whose URLs start with “https”).

  • Learn to recognize “phishing” attempts. One common scam involves fraudsters posing as representatives of the IRS to solicit personal information over the phone or via e-mail. The IRS will not call or e-mail you to request sensitive information or threaten you with jail or lawsuits.

Protecting yourself from tax-related fraud takes a fair amount of vigilance, but is definitely worth it.