Unlike most of us, perpetrators of identity theft love tax season – they are eager to file your tax return for you. Tax-related identity theft occurs when someone unlawfully uses a social security number to file a fraudulent tax return and claim a refund, and it happens more often than you might expect. What do you do when it happens to you? How can you detect and prevent it?
The Internal Revenue Service (“IRS”) uses your social security number to help ensure that your tax return is accurate, complete, and that you receive any refund you are due. Identity thieves understand this and may file a fraudulent tax return in your name to claim the refund before you do. When you attempt to file at a later date, you will receive a notice from the IRS stating that more than one return was filed in your name.
Debt collection, identity theft, and imposter scams topped the list of the Federal Trade Commission’s (“FTC”) most common complaints by taxpayers in 2015. Identity theft complaints increased by 47 percent from 2014, with a total of 490,220 complaints filed in 2015, with another 353,770 complaints of imposter scams. The FTC is in the process of increasing security measures, but identity thieves are resourceful and the tax fraud landscape is always changing.
Often, identity thieves will send taxpayers fabricated IRS documents asking for identifying information, such as your name, date of birth, and social security number.
However, communication that appears to be from the IRS is not always fraudulent. As a taxpayer, how do you tell the difference between legitimate and fraudulent communication and how do you prevent identity theft? Begin by following the steps below:
- If you receive a suspicious email or message, do not reply and do not open any attachments. Call the IRS’s impersonation scam reporting service at 1 (800) 366-4484 to determine if the message is legitimate. If you already replied or opened the attachment, forward the message to firstname.lastname@example.org, delete the message, close your browser, and run antivirus and malware protection software.
- If you receive a suspicious phone call, write down the name, badge number, and call back number of the caller. Call the IRS’s impersonation scam reporting service at 1 (800) 366-4484 to determine if the caller is actually an IRS employee.
- If you receive a suspicious letter or notice, verify its legitimacy by searching for the letter or notice’s form number on the IRS home page. Do not call any phone numbers or visit any website that is not part of IRS.gov. If you already visited the website, send its web address to email@example.com, close your browser, and run antivirus and malware protection software.
- If you receive a suspicious text message, do not reply, open any attachments, or click any links. Forward the message to (202) 552-1226 and send a second message with the suspicious phone number. If you already opened an attachment or clicked a link, delete the message and run antivirus and malware protection software on your device.
If you believe that you are a victim of tax fraud, don’t worry – you can still file your tax return. The process involves filing a complaint with the FTC to report identity theft, filing Form 14039 “Identity Theft Affidavit”, and receiving IRS Form CP01F, which includes a six-digit Identity Protection PIN (IP PIN) to be used to correctly file your return. This process prescribed by the IRS, although often lengthy and burdensome, is a necessary one that we are happy to help with. To begin the process of reporting and recovering from identity theft, visit https://www.identitytheft.gov/. In addition, California residents may report identity theft to the Franchise Tax Board by calling (916) 845-7088 or by filing California Form 3552 “Identity Theft Affidavit”. Visit https://www.ftb.ca.gov/online/fraud_referral/index.shtml for more information.
Tax identity theft could be just one area in which your social security number is compromised. We also advise using a third-party credit monitoring service to ensure the rest of your finances are secure.
Many of the communications that you receive regarding your tax return are legitimate and should be treated as such, but it pays to be careful. If you receive an email, message, or phone call requesting personal or financial information, and you suspect that it may not be legitimate, forward the message to firstname.lastname@example.org to alert the IRS and to help protect yourself and others. If you have any questions or concerns regarding this topic or any other tax matters, please do not hesitate to contact your L&B professional at (858) 558-9200.