It’s something that you’d least expect to happen when preparing to pay Uncle Sam. Unfortunately, this year, many people discovered while trying to file that someone else had fraudulently used their Social Security number to file a false tax return.
Tax refund fraud is on the rise this tax filing season. According to the Treasury Inspector General for Tax Administration, as of March 6, the IRS had identified more than 57,000 returns with $385 million claimed in fraudulent refunds. The IRS prevented issuance of $336 million of those funds. So, even with stepped-up prevention methods, criminals are still getting away with your hard-earned money.
Signs of tax filing identity fraud
The IRS says you may be a victim if your tax preparer or the IRS contacts you about one of these scenarios:
- More than one tax return for you was filed.
- You have a balance due, refund offset or have had collection actions taken against you for a year you did not file a tax return.
- IRS records indicate you received more wages than you actually earned.
- Your state or federal benefits were reduced or canceled because the agency received information reporting an income change.
It’s important to note that e-filing doesn’t put you at greater risk for fraud. Paper filers are just as susceptible to becoming a victim. The thieves have filed these returns with success because they’ve been able to file the fraudulent returns before the true owners of the Social Security numbers have had the chance to file. Paper filers who mailed returns on the tax deadline may still get a notice that a return was previously filed using their Social Security number.
What can a victim do?
1. Contact the IRS or your tax adviser immediately.
If you receive a notice from the IRS, call the number on the notice. If you suspect that you are a victim of tax filing identity fraud, you can contact the IRS Identity Protection Specialized Unit at 1-800-908-4490, extension 245. This step will allow the IRS to secure your tax account and match your Social Security number or individual taxpayer identification number (ITIN). According to the IRS, a typical case will take about 180 days to resolve. Your tax adviser can assist you with this process.
2. Complete IRS Form 14039.
Form 14039 is an Identity Theft Affidavit. You should fill this form out to officially notify the IRS that you are an actual or potential victim of fraud and to verify your identity.
3. Contact the FTC, credit bureaus and the local police.
To minimize the damage criminals can do to your personal credit, contact the fraud divisions of the Federal Trade Commission. You also should contact the fraud departments of the three major credit bureaus: Equifax, Experian and Transunion. You also can file a report with the local police.
4. Review your credit report.
It’s also a good idea to get a copy of your credit report from the three major bureaus to identify any fraudulent activity so you can close any credit accounts that have been opened in your name.
How can you prevent tax filing identity fraud?
1. Don’t give personal information unwittingly.
Be aware of scams where seemingly authorized individuals try to collect personal information from you like your Social Security and bank account numbers — especially if this correspondence comes via e-mail.
2. Check your credit report regularly.
Reviewing your credit report may alert you to fraudulent activity before too much damage has been done.
3. Open correspondence from the IRS.
When the IRS contacts you, follow up. Your identity could be compromised.
4. Purchase identity theft protection.
Consider purchasing an identity theft monitoring service to keep a watchful eye on your financial profile 24/7.
Click here for more information on what to do if your identity is stolen.
Brown Smith Wallace has a team of tax advisers ready to assist you with your tax needs. Contact Robin Bell or any of our tax professionals for a consultation today.