If filing an income tax return isn’t stressful enough, some consumers are only now finding out that they are the victims of identity theft when they file their returns. The results include problems with the tax collectors and inability to claim a refund.
In a common scenario, a taxpayer will receive a notice from the Internal Revenue Service (IRS) informing them that more than one tax return has been filed on their behalf, that there are missing documents, references to an unfamiliar employer or that they owe back taxes. In addition, the taxpayer may be told that their refund already has been paid out.
The fake returns are being filed by identity thieves using personal information that may be gathered from a variety of sources, including a stolen wallet, access to your personal information through an unsecured website, by rifling through your trash or posing as someone who requires your personal information through email or by telephone.
While the IRS has increased its resources to identify income tax fraud committed by ID thieves, Connecticut Better Business Bureau recommends consumers keep in mind the following:
- The IRS doesn’t reach out through the Internet — In the wake of a spate of email SPAM and phishing scams, the Internal Revenue Service wants taxpayers to know it does not threaten audits or ask for personal information by email or social media tools.
- Make sure you are on the IRS website — If you are directed to a website that appears to be the IRS site but whose address does not begin with www.irs.gov, don’t click on any links or download attachments, such as forms. Forward the URL (web address) to email@example.com.
- If in doubt, reach out — If you receive a tax-related telephone call or letter that you suspect may not be legitimate, contact the IRS.
- Protect your Social Security number — Don’t carry your card with you and make sure your previous years’ tax returns are stored safely. Only certain entities and companies require your Social Security number, including employers, insurance companies, institutions through which you submit a credit application; the three main credit reporting agencies, Exquifax, TransUnion and Experian; any company that sells products or services that require notification to the IRS, including investment advisors; real estate purchases; financial transactions more than $10,000, such as automobile purchases and other financial transactions.
- Use a reputable tax preparer — An income tax return contains all of the information needed for somebody else to claim your refund and open lines of credit in your name. Be selective about who prepares your return, and find out how your information is protected.
- Don’t keep a copy on your computer — Computers can be hacked, and ID thieves can recover “deleted” files from old computer drives. If you scan-in a copy of your tax return, make sure you use strong encryption on the file or else store in on an external drive in a safe place.
If you suspect you are the victim of identity theft, contact the IRS, Social Security Administration, the three major credit reporting companies and your financial institutions right away.
While the IRS is aware of the many methods used to perpetrate income tax fraud, you must takes steps quickly to correct any mistakes and prevent personal and financial ruin.