What To Do If Identity Tax Fraud Happens To You

Identity tax fraud can happen to anyone. We’ll help you be prepared.

Are you who you say you are?

A number of new clients have come to my office for assistance with dealing with the tax repercussions of having their identity stolen. Identity thieves use stolen identities to perpetrate fraud in many ways, one of which is to file a fraudulent tax return and claim a refundable credit.

This is usually done early in the tax filing season, from mid-January to early February. Often, this fraud is not discovered until the individual files the real tax return, only to be told by the Internal Revenue Service that a return has already been filed. In most cases, this delays the processing of the legitimate return, which means that you may not receive your refund for several months.

What many people do not know is that the IRS is working diligently to reduce fraudulent tax returns (Yes they are on your side!). The IRS issues taxpayer alerts regarding identity theft scams on their website and YouTube. Through the joint efforts of the IRS, State Tax Agencies, and taxpayers reporting stolen identities the IRS hopes to continue reducing fraudulent tax returns filed.

Photo Identification

The IRS has implemented a new requirement this year to help combat the problem: photo ID. Tax return preparers are now required to ask for photo identification when preparing tax returns. Failure to do so will result in a delay when processing your return.

So bring your photo identification with you to your tax appointment, as you will be asked to provide this to your tax return preparer.

Other scams

This time of year, it is not unusual to see tax-related emails from your employer’s human resources department. Be careful when opening these emails, and be specially wary of opening any attachments. Phishers have been known to send emails requesting recipients to download or confirm their personal information. If you work in human resources, you might get an email from an employee requesting a copy of their W2.

What you should do if your identity is stolen

You can help the IRS and State Tax Authorities if you have experienced identity theft by communicating with them. Contact the IRS to obtain an Identity Protection Personal Identification Number (IP-PIN) and completing Form 14039 Identity Theft Affidavit. Complete Form Identity Theft Affidavit with the MA DOR. Complete Form IC3 – Internet Crime Complaint Center with the FBI and report it to the local Police.

If your identity is stolen, you should contact the IRS, MA DOR, FBI, and local Police as indicated above. In an attempt to stop further financial damage you should contact the three Credit Reporting Agencies (Equifax 866-349-5191, TransUnion 877-322-8228, and Experian 888-397-3742) to report the identity theft and lock your credit report. Each Credit Reporting Agency offers a host of services to monitor your credit, one service you should consider that is relatively inexpensive is a “Credit Lock”, a “Credit Lock” requires a personalized PIN and fee (in some cases) to lock and unlock your credit with each Credit Reporting Agency.

Preventive measures you should take to protect your credit is lock your credit with each credit reporting agency, at least annually if not quarterly obtain a copy of your credit report to review it for accuracy and unknown accounts, lock your mail box, watch for acceptance or rejection letters from credit card company’s you did not apply for, shred your mail when you dispose of it, secure your wireless networks, install a firewall, disable remote management of your router, disconnect from the internet or turn off your computer when not using it, install anti-virus software on your computer and update it regularly, disconnect or cover your computer camera when not in use, back up your data on an external hard drive regularly, use complicated passwords, regularly change your passwords, on mobile devices use finger print and complicated passwords to log into the device, be careful with the apps you down load, install anti-virus software, and turn off your GPS when not being used. Social Networks you should opt for maximum privacy, only accept invitations from people you know, do not past personal data on you site such as social security number, date of birth, telephone, bank, and credit card account numbers. On Line purchases should only be completed with known vendors. This list is not totally comprehensive but is a first good step to protecting your identity.

We all do our best to monitor our credit card and bank activity by reviewing our monthly statements in detail. If you see a suspicious entry, be sure to investigate immediately. The credit you are saving is your own.

Whilst we all do our best to monitor all of our monthly statements and credit reports, the unscrupulous predators do their best to take advantage of any one they can. So do your best to be mindful of this fact during your everyday life when using the internet, your mobile device, paying a bill with a credit card or check.


Posted by Terranova & Associates LLC

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