Tax-Related Identity Theft

Tax season is here and, unfortunately, that means identity theft is something that everyone should be aware of and ready to prevent. Tax-related identity theft has been rising over the last several years and is forecasted to continue. As such, the Internal Revenue Service (IRS) has implemented a variety of measures to arm taxpayers with the ability to detect fraudulent activity. According to the IRS, “tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund”. While local news stations may report this type of fraud in a sensationalized manner, it is important to approach this issue rationally. Being educated and prepared is critical as you navigate warning signs and develop action plans in the event of tax-related identity theft.

Many people do not know that tax-related identity theft has occurred until they attempt to e-file their tax return. At that point in time, the taxpayer is informed that they have already filed using their Social Security number. In some scenarios, the IRS will reach out to the taxpayer preemptively and send a letter stating a suspicious return has been identified. Being fully aware of the warning signs is instrumental in preventing possible fraudulent activity. The following are some of the most common warning signs of tax-related identity theft:

1. Multiple tax returns are filed using your Social Security number
2. You receive a letter from the IRS stating you have already filed your taxes when you had not done so yet
3. You suddenly owe additional tax, had collection actions taken against you, or a refund offset from a year in which you did not file a tax return
4. You are unable to file your taxes online
5. Your IRS records point out that you received wages or some other type of income from an employer that you did not work for

If you believe that you have fallen victim to tax-related identity theft, it is important to take action as soon as possible. First and foremost, file a complaint here with the Federal Trade Commission (FTC). Then, contact either Experian, TransUnion, or Equifax to place a “fraud alert” on your credit records. Finally, get in touch with your financial institutions to close any accounts that have been tampered with or opened without your authorization.

Keep in mind, however, that not all data breaches or other types of hacks end in tax-related identity theft. Taking a proactive approach in knowing what personal information was stolen is the first step in detecting what the actual issue may be. Regardless of the specific situation, a quick response is imperative. The faster you are able to contact the appropriate agencies concerning your case, the better the results are likely to be.