Identity Thieves are Looking for Your Tax Return
Identity theft can wreak havoc with your finances, credit history and reputation. The amount of time, money and patience needed to resolve it can make it an emotional and frustrating process.
“Having your identity stolen is a very violating experience for people,” CPA David Forbess says. “One day you are just going about your way, and the very next moment you realize that someone has infiltrated your financial livelihood.”
And while you might assume seniors are the most common age group of victims, 44% of these reports were from people between the ages of 20 and 29, while just 13% were from people over 70 years old.
Most people also associate identity theft with financial fraud, but it’s much more than that. Once identity thieves have your personal information, they can drain your bank account, run up charges on your credit cards, open new utility accounts, or get medical treatments on your health insurance.
An identity thief may even file a tax return in your name to get a refund.
TAX FRAUD LEADING THE WAY
In fact, tax related identity theft is the second most common type of identity theft. It involves fraudsters getting access to your personal information, which is then used to file a tax return and get a refund under your name.
David still remembers the day he was alerted by the CWA tax team that his client’s tax return was rejected by the IRS. After some investigating, they discovered a fraudster had previously filed his client’s tax return in hopes of getting a refund.
“When I called to inform my client of the situation, he was blindsided, to say the least,” David recalls. “I advised him that now was the time to channel these feelings and use them to take back control of the situation, to get proactive in countering the fraudster.”
ACT QUICKLY TO MINIMIZE IMPACT
David was able to help guide his client through a reporting and recovery process to ensure that the fraudster was not able to do any more damage.
Setting things straight involves some work. If you suspect that someone has stolen your identity, acting quickly is the best way to limit the damage.
David suggests taxpayers follow these steps:
- Obtain a copy of your credit report and look through to see if any entries are wrong. If so, report them to the credit bureaus.
- Contact the Fraud Department of the three major credit bureaus and place a fraud alert on your credit report. This can be done online or by telephone with Equifax, Experian and TransUnion.
- File an identity theft report with your local police department.
- Report and create an Identity Theft Report with the FTC.
- Obtain a copy of your IRS “Record of Account Transcript.” This is done online. Email a copy of this report to your financial advisor.
- Contact all investment companies that you have working as brokerage firms. Your financial advisor may also be able to guide you on this.
You use your personal data to perform a myriad of tasks every day, and although this data is usually encrypted, that doesn’t mean it’s completely secure.
Although 100% prevention is impossible, there are some things you can do to reduce the chances of this happening to you. Keep financial records under lock and key and don’t keep sensitive information (like your Social Security or Medicare card) on you.
Take outgoing mail to a post office or a collection box versus your personal mailbox, especially if you are going on trip.
Never provide any personal information in response to an unsolicited phone call, email, social media message or text message. The IRS has been very clear: they will not contact consumers using these methods, and will not threaten legal action.
Most importantly, David advises his clients to exercise their curiosity. Before you share information at the workplace, business, kids’ school, or doctor’s office, ask who will have access to your information, how it will be handled, and how will it be disposed of.
In the case of David’s client, his story ended well; because it was caught early, it resulted in no financial loss.
Equifax Fraud Alert: www.equifax.com or call 1-800-525-6285
Experian Fraud Alert: www.experian.com or call 1-888-397-3742
TransUnion Fraud Alert: www.transunion.com or call 1-800-680-7289
Federal Trade Commission’s Identity Theft Division: www.consumer.ftc.gov/features/feature-0014-identity-theft.
To file a complaint and create an Identity Theft Report with the Federal Trade Commission: www.consumer.ftc.gov/articles/0277-create-identity-theft-report
To file a complaint with the Internet Crime Complaints (IC3): www.ic3.gov
To request your latest Record of Account Transcript: www.irs.gov/individuals/get-transcript