Tax Tips - Identity Theft and Taxes

Unscrupulous people that file your return for you are not doing you any favors. The fraud is committed when they file an income tax return using your name and your social security number, and using a false W-2. The big refund is then sent the fraud party, they forge your signature, and then negotiate the check to some other wash account. And of course, you are totally oblivious to this until you file YOUR income tax return.

The IRS takes identity theft-related tax fraud very seriously. The IRS now has approximately 3,000 employees working on identity theft-related issues. During 2012, the IRS was able to stop $20 billion of fraudulent refunds compared with $14 billion in 2011. So be guarded that identity theft is on the rise.

When identity thieves use your personal information to file a tax return to claim a tax refund, the IRS will not accept your return and will notify you that a return was already filed using your name and social security number. Often, learning that your return was not accepted or receiving a contact from the IRS about a problem with your tax return is the first time you become aware that you’re a victim of identity theft.

To avoid becoming an identity theft victim with the IRS, the obvious is of course guard your personal information such as your social security number and date of birth. Don’t be eager to hand it out over the phone or write it on an application. And if you do, or did, ask what their means of disposal will be (merely throw it in the trash, or dispose of it properly by shredding it). And never, never put your name and social security number on a website or in unencrypted or un-password protected email message. Otherwise, you are a potential open target. Same thing goes for your children.

Some other tips…….The IRS will never contact you by email, and will almost never initiate contact with you by telephone. If you do get such an email or telephone call, call the police first before you make any further contact. It is probably a scam. If you are preparing your own income tax return using one of the popular software programs, be sure and protect the file with a strong password.

If you think you may be at risk for identity theft due to a lost or stolen purse or wallet, or in any other way, in addition to contacting the police, you should also contact the IRS Identity Protection Specialized Unit toll-free at 1-800-908-4490. Hopefully you will never need to call this number.

Disclaimer – Bruce Baer is a CPA with Baer and Co. CPAs, which advertises with Journal Register Co. publications.

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